The American multinational hospitality company that manages and franchises of luxury hotels, resorts, and vacation properties, Hyatt Hotels Corporation (NYSE: H) seems to be gearing up for a surge as per its latest charts.
#1 Ascending triangle pattern: Hyatt Hotels’ 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 purple color. The base of the triangle generally acts as a good support level.
#2 Bullish Cross in Chaikin Osc: Whenever there is a crossover on the Chaikin Oscillator from below the zero line to above the zero line, it is termed as a bullish cross.[hana-code-insert name=’adsense-article’ /]Typically, prices start to increase whenever this crossover happens. Currently, the Chaikin Oscillator has had a bullish cross which is a bullish sign.
#3 Strong RSI: RSI is currently moving upwards after reaching oversold levels. This indicates bullishness.
#4 Bullish 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.
#5 Hammer: The latest candle is a hammer, indicating a possible reversal to the upside.
#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 Flag Pattern: The stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in purple color in the weekly chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
#8 CCI Moving up: The CCI indicator is currently moving up from below -50. This indicates that 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 H in the following scenarios
- If the stock breaks out of the ascending triangle pattern. This translates to a daily close above $83.50.
- If the stock corrects to support level of $75.
You can also purchase half the intended quantity of stocks at the current price of $79.33.
TP: Our target prices are $92 and $100 in the next 3-5 months.
SL: To limit risk, place a stop loss at $74.50. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 15% to 33% in the next 3-5 months.
- Entry at $75: For a risk of $0.50, the target rewards are $17 and $25. This is a nearly 1:34 and 1:50 risk-reward trade.
- Entry at $79.33: For a risk of $4.83 the target rewards are $12.67 and $20.67. This is a nearly 1:3 and 1:4 risk-reward trade.
- Entry at $83.50: For a risk of $9, the target reward (TP#2) is $16.50. This is a nearly 1:2 risk-reward trade
In other words, this trade offers nearly 2X to 50X 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.
Tara[hana-code-insert name=’TOD webinar’ /]