The well-known provider of fuel cards and workforce payment products and services, FleetCor Technologies, Inc. (NYSE: FLT) shows signs of an upcoming price surge based on its latest charts.
#1 Ascending Triangle Pattern: FLT’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 pink color. The base of the triangle generally act as a good support level. The stock had recently taken support at the bottom of the Ascending Triangle pattern and seems to be starting its upward move.
#2 RSI Moving Up: In the daily chart, RSI is near 50 and moving up, indicating strength.[hana-code-insert name=’adsense-article’ /] #3 Strong Stochastic: As you can see from the daily chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#4 Fibonacci Support: The stock had taken support at the 61.8% Fibonacci retracement level before continuing its upmove.
#5 William’s %R above central line: William’s %R shows that the value has crossed the central line (-50), indicating bullishness.
#6 Pennant Pattern: As seen from the weekly chart below, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range. This is a classic pennant pattern and is marked in the chart below in orange color. Currently, the stock is trading near the lower end of the pennant. A pennant is a continuation pattern. Whenever a stock breaks out of the pennant pattern, it typically continues its previous trend (uptrend in this case).
#7 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 months.
#8 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.
#9 Near central line cross: William’s %R shows that the value has is about to cross the central line (-50), indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of FLT in either of the two scenarios:
- If the price closes above the 50-day MA. This translates to a daily close above $203.
- If the price corrects to the bottom of the ascending triangle pattern. This translates to price around $196.40.
TP: Our target prices are $220 and $240 in the next 3-6 months.
SL: To limit risk, place a stop-loss at $189.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 12% to 22% in the next 3-6 months.
- Entry at $196.40: For a risk of $6.90, our target rewards are $23.60 and $43.60. This is a 1:3 and 1:6 Risk-Reward trade.
- Entering at $203: For a risk of $13.50, our target reward (TP#2) is $37. This is a 1:3 Risk-Reward trade.
In other words, this trade offers nearly 3x 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 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.
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