The popular financial services leader with more than $1 trillion of assets under management, Prudential Financial Inc. (NYSE: PRU) seem to be poised for a price surge as per its latest charts.
#1 Falling Wedge Pattern: As you can see from the daily chart, PRU has been trading within a falling wedge pattern during the past few weeks. This is marked in blue color in the daily chart. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
#2 Bounce from Channel: There was a channel formed in the daily chart (marked as orange lines). The stock had taken support at the bottom of the channel and is now moving up. This is a bullish sign.[hana-code-insert name=’adsense-article’ /] #3 Strong RSI: The daily chart shows that the RSI is currently moving up after reaching oversold levels. This points to a possible upmove.
#4 MACD Above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#5 Bullish Reversal Candle: The weekly chart shows that a bullish reversal candlestick pattern of piercing line was formed recently.
This is marked as a pink ellipse. The stock has since then started moving higher, indicating that the price may move higher in the short term.
#6 Strong Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line and moving up. This indicates a possible reversal from the current short-term downtrend.
#6 Good Support Level Nearby: There is a good support level for the stock nearby. The stock has currently taken support at the 50% Fibonacci retracement level. This seems like a good level for the stock to bounce upwards.
#7 Other Bullish Indications: The CCI is above -100 and moving up from oversold levels in the weekly chart. This is also a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of PRU at the current price of $96.30.
TP: Our target prices are $105 and $120 in the next 3-6 months.
SL: To limit risk, place stop-loss at $91.90. Note that stop loss is on a closing basis.
Our target potential upside is 9% to 25% in the next 3-6 months. For a risk of $4.40, our target rewards are $8.70 and $23.70. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x 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.
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