The popular international company engaged in label solutions business, supporting brands, including producers of home and personal care, wine and spirit, food and beverage, healthcare and specialty consumer products, Multi-Color Corporation (NASDAQ: LABL) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern: As you can see from the daily chart, the stock has been trading within a falling wedge pattern during the past few months. This is marked in the daily chart in pink color. A Falling Wedge Pattern is a bullish pattern. Once the stock moves up and breaks out from it, it has the potential to move further up.
Daily Chart – LABL
#2 Double Bottom: In the daily chart of LABL, a double bottom pattern is being currently formed within the falling wedge. This is shown in the daily chart in purple color.
[hana-code-insert name=’adsense-article’ /] A Double bottom pattern is a bullish reversal pattern, indicating that the stock would possibly move upwards shortly.#3 RSI moving up: In the daily chart, RSI was oversold and is currently moving up, indicating strength.
#4 CCI above -100: The CCI indicator value is above -100 and moving up, indicating possible bullishness.
#5 Unbroken Uptrend in Weekly Chart: As evident from the weekly chart, the stock is in an uptrend as it has been making higher highs and higher lows for the past several months.
Weekly Chart – LABL
#6 RSI moving up: In the weekly chart of LABL, RSI is above 40 and moving up after reaching oversold levels, indicating strength.
#7 Double Bottom: The weekly chart shows that the stock is forming a double bottom pattern. Once the stock breaks out of this bullish pattern, it may move higher.
#8 Long-term support level: The weekly chart shows that the stock is currently trading near a long-term support level (shown as blue dotted lines). The stock had previously taken support here multiple times. This seems like a good level for the stock to bounce back.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the stock at the current price of $64.10
TP: Our target prices are $70 and $85 in the next 3-6 months.
SL: To limit risk, place stop-loss at $59.40. Note that stop loss is on a closing basis.
Our target potential upside is 32% in the next 3-6 months. For a risk of $4.70, our target reward (TP#2) is $20.90. This is a 1:4 risk-reward trade.
In other words, this trade offers nearly 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with a high volume. 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!
Tara
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