The product solutions company providing comprehensive electronics design, manufacturing and product management services to global electronics and technology companies, Jabil Inc. (NYSE: JBL) seems to be gearing up for a surge as per its latest charts.
#1 Golden Cross of MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. In addition, there is also a golden cross, where the 50-day moving average has risen above 200-day moving average. This implies that there is a possible bullish bias for the stock.
#2 Ascending triangle pattern: JBL’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 blue color. The base of the triangle generally acts as a good support level.[hana-code-insert name=’adsense-article’ /] #3 Symmetrical Triangle Pattern: The stock is also forming a Symmetrical Triangle pattern.
This is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs.
This is marked on the daily chart as pink dotted lines.
#4 MACD above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color).
This is a possible bullish setup.
#5 Strong RSI: RSI is currently above 50, indicating bullishness.
#6 Unbroken uptrend: The weekly chart shows that the stock is in an unbroken uptrend as it has been forming higher highs and higher lows during the past several months.
#7 Bullish Stochastic: As you can see from the weekly chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#8 Strong RSI: RSI is currently above 50, indicating bullishness.
#9 IH&S Pattern: As you can see from the weekly chart of JBL, over the past several weeks, the stock has been forming an Inverted Head and Shoulders (IH&S) pattern. This is marked in orange color. An IH&S pattern is a strong bullish pattern. After the completion of this IH&S pattern, the stock may move higher in the short term.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of JBL in two scenarios
- If the stock breaks out of the ascending triangle pattern. This translates to a daily close above $30.
- If the stock corrects to the lower end of the ascending triangle pattern, at around $27.50.
TP: Our target prices are $37 and $45 in the next 3-6 months.
SL: To limit risk, place a stop loss at $26.50. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 23% to 63% in the next 3-6 months.
- Entry at $27.50: For a risk of $1.00, the target rewards are $9.50 and $17.50. This is a nearly 1:10 and 1:18 risk-reward trade.
- Entry at $30.00: For a risk of $3.50 the target rewards are $7.00 and $15.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2X to 18X 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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