The global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world, Franklin Resources, Inc. (NYSE: BEN) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Breakout: As you can see from the daily chart of BEN, the stock had been forming a falling wedge pattern during the past few weeks. This is marked as purple color lines. The stock has currently broken out of the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – BEN
#2 Near Support Area: From the daily chart, we can see that the stock is currently consolidating near a support level (marked as an orange dotted line). This seems like a good support area for the stock to move upwards.
[hana-code-insert name=’adsense-article’ /]#3 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 potential buy signal.
#4 RSI Strong: Relative strength index (RSI) is currently near 50 after moving up from oversold levels.
This indicates the strength.
#5 CCI moving up: The CCI is currently moving above 50 from below -100. This indicates that an upmove may be imminent for the stock.
#6 Near long-term support level: As seen from the weekly chart, the stock is currently trading near a long-term support level (marked as an orange dotted line). This seems like a good level for the stock to start moving up.
Weekly Chart – BEN
#7 Oversold RSI: In the weekly chart, the RSI is currently moving up after reaching oversold levels, indicating strength.
#8 MACD above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color), indicating bullishness.
#9 Rising Stochastic: The %K line has crossed above the %D line. The stochastic is also moving up from below 20. All this indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of BEN at the current price of $32.48.
TP: Our target prices are $37 and $44 in the next 3-6 months.
SL: To limit risk, place a stop loss near $30.40. Note that the stop loss is on a closing basis.
Our target potential upside is 14% to 35% in the next 3-6 months.
For a risk of $2.08, our first target reward is $4.52 and second target reward is $11.52. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers 2x to 6x 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 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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