The holding company for Bank of Marin, Bank of Marin Bancorp (NASDAQ: BMRC) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: BMRC’s daily chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The breakout level of the ascending triangle pattern generally acts a good support level.
Daily Chart – BMRC
#2 Crossed Above Double Top Resistance: The stock had recently formed a double top pattern. It is a bearish pattern and is marked in orange color in the chart. Currently, the stock has crossed above the resistance level of this double top pattern. This is a possible bullish sign.
[hana-code-insert name=’adsense-article’ /]#3 Trading Above MA: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#4 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a bullish bias.
#5 IH&S Pattern Breakout: From the weekly chart of BMRC, you can see that the stock was in an uptrend.
After that, it has been consolidating in the form of an Inverted Head and Shoulders (IH&S) pattern, which is a bullish pattern. This is marked in the chart below in orange color. Currently, the stock has broken out of the IH&S pattern. This is a possible sign of an upcoming bullish move.
Weekly Chart – BMRC
#6 MACD above Signal Line: In the weekly chart, the MACD line has crossed above the MACD signal line which is a bullish signal. The stock is also trading above both 50-week and 200-week SMA, indicating that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of BMRC at the current price of $75.50. The other half can be purchased if the stock corrects back to the breakout level of ascending triangle pattern at around $72.00.
TP: Our target prices are $85 and $95 based on the breakout from Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $68.80. Note that this stop loss is on a closing basis.
Our target potential upside is 18% to 32% in the next 4-6 months.
- When entering at $72.00: For a risk of $3.20, the target rewards are $13.00 and $23.00. This is a nearly 1:4 and 1:7 risk-reward trade.
- When entering at $75.50: For a risk of $6.70, the target reward (TP#2) is $19.50. This is a nearly 1:3 risk-reward trade.
In other words, this trade offers nearly 3X to 7X 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 breakout level. 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.
Happy Trading!
Tara
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