Popular American health care company with headquarters in Lake Bluff, Illinois, Abbott Laboratories (NYSE: ABT) seems to be getting ready for a price surge according to its latest charts.
#1 Ascending triangle pattern support: ABT’s daily chart shows that the stock has currently taken support at the bottom of the Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked in the chart in blue lines. The stock has historically taken support near the bottom of ascending triangle pattern before moving higher again.
#2 Bullish Harami: The latest candlestick pattern in the daily chart is a bullish harami. This pattern appears during a downtrend, wherein a bearish (red) candlestick engulfs a small bullish (green) candlestick. This pattern usually signals the reversal of the downward trend.
[hana-code-insert name=’adsense-article’ /]#3 RSI nearing Oversold: In the daily chart, the RSI is moving up from near oversold levels.
This implies that a possible reversal is around the corner.
#4 Uptrend Unbroken: As you can see from the daily chart of ABT, the stock’s uptrend is still unbroken as the stock has been forming higher highs and higher lows.
#5 Near support levels: The daily chart shows that the stock is currently trading near the gap support (marked as green dotted lines). The stock is also above its 200-day SMA. These generally act as good support levels for the stock.
#6 CCI nearing Zero line cross: The weekly chart of ABT shows that the Commodity Channel Index (CCI) is currently moving up and is nearing zero line. Once the cross above zero line happens, it indicates bullishness. In the daily chart, CCI is currently oversold, indicating an upcoming price reversal.
#7 Above MAs: The weekly chart shows that the stock is currently trading above both 50-week as well as 200-week SMA. This implies that the uptrend is still quite strong. The uptrend is also unbroken, as the stock has been forming higher highs and higher lows for the past few months.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of ABT at the current price of $58.22.
TP: Our target prices are based on the ascending triangle pattern. The first TP is $64 and the second TP is $75.
SL: To limit risk, place a stop loss below $55.50. Note that this stop loss is on a closing basis.
The target potential upside for this trade is nearly 10% to 27% in the next 3-5 months. For a risk of $2.72, the target rewards are $5.78 and $16.78. This is a nearly 1:2 and 1:6 risk-reward trade, which means that this trade offers nearly 2X to 6X more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from 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 its sector.
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