This Trade Targets a 22% to 34% Return in the Next 4-6 Months

The parent company of Home Bank, a national bank headquartered in Lafayette, Louisiana, Home Bancorp, Inc. (NASDAQ: HBCP) shows signs of an upcoming price surge based on its latest charts.

Bullish Indications

#1 Ascending Triangle Pattern: HBCP’s daily chart shows that the stock is currently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The base of the triangle generally acts a good support level. The stock had recently taken support at the bottom of the Ascending Triangle pattern and is now moving upwards.

Daily Chart – HBCP

#2 Imminent MACD Cross: The daily chart of BHCP shows that the MACD (light blue color) line is about to cross above the MACD signal line (orange color). When this happens, a potential buy signal is generated.

[hana-code-insert name=’adsense-article’ /]#3 RSI Moving Up: In the daily chart, RSI is above 50 and moving up, indicating strength.

#4 Flag Pattern in Weekly Chart: From the weekly chart, it is evident that HBCP was in a strong uptrend for the past several weeks.

Then the stock started consolidating and was in a narrow range.

This is a classic flag pattern, which is a continuation pattern.

This is marked in purple color in the weekly chart below. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.

Weekly Chart – HBCP

#5 Unbroken Uptrend: The weekly chart shows that the trend is still up, as the stock has been forming higher highs and higher lows for the past few years.

#6 Trading Above MA: The stock is currently above both 50-week SMA as well as 200-week SMA. This shows that the bulls are still in control.

Recommended Trade (based on the charts)

Buy Price: If you want to get in on this trade, you can purchase the shares of HBCP in either of the two scenarios:

  • If the price breaks out of the ascending triangle pattern. This translates to a daily close above $45.
  • If the price corrects to the bottom of the ascending triangle pattern. This translates to around $41.

TP: Our target prices are $50 and $55.

SL: To limit risk, place a stop-loss at $39.50. Note that this stop loss is on a closing basis.

Our target potential upside is almost 22% to 34% in the next 4-6 months.

  • Entering at $41: For a risk of $1.50, our target rewards are $9 and $14. This is a 1:6 and 1:9 Risk-Reward trade.
  • Entering at $45: For a risk of $5.50, our target reward (TP#2) is $10. This is a 1:2 Risk-Reward trade.

In other words, this trade offers nearly 2x to 9x more potential upside than downside.

Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the lower end of the ascending triangle pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.

Happy Trading!


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