The Pennsylvania-based company that engineers, designs, and manufactures aircraft components, systems, and accessories, Triumph Group Inc. ( NYSE: TGI) seems to be poised for a surge as per its latest charts.
#1 Trading Within Downtrend Channel: As you can see from the daily chart of TGI below, the stock is trading within a downtrend channel for the past several months. This channel is marked in blue color in the daily chart below. Once the stock breaks out from this downtrend channel, it can move higher.#2 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 bullish signal.
#3 Gravestone Doji: The stock had recently shown bullishness on August 8, 2018, with a high volume bullish candle. After that, it has been correcting at low volumes.[hana-code-insert name=’adsense-article’ /]The latest candle in the daily chart is a gravestone doji.
This is a bullish reversal candle and usually indicates a possible reversal from the current downtrend.
#4 Cross of MAs: The price is currently above the 50-day SMA and is near the 20-day SMA.
The 20-day SMA has also crossed above the 50-day moving average.
This implies that there is now a possible bullish bias for the stock.
#5 Downtrend Broken: As you can see from the weekly chart, the stock has currently broken out of the prevailing downtrend.
This downtrend line marked in purple color in the chart below. This is a possible bullish sign.
#6 MACD above signal line: In the weekly chart, the MACD line (light blue color) had crossed above the MACD signal line (orange color) and is currently above it, which is a bullish sign.
#7 Bullish Stochastic: The weekly chart shows that the %K line (blue color) is currently above the %D line (orange color) in the stochastic. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the stock at the current price of $20.50.
TP: Our first target price is $25 and the second target price is $35. Note that this stop loss is on a closing basis.
SL: To limit risk, place a stop loss at $17.60. Note that the stop loss is on a closing basis.
Our target potential upside is almost 22% to 71% in the next 4-6 months. For a risk of $2.90, our target rewards are $4.50 and $14.50. This is an almost 1:2 and 1:5 Risk-Reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Note: For those with a higher risk-appetite, you can place a stop loss below $19.80 instead, for a higher risk-reward. This gives a 1:6 and 1:20 risk-reward for the same trade.
Risks to Consider
The stock may reverse its overall trend if the stock breaks down below the bottom support of the channel 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 its sector.
Tara[hana-code-insert name=’MMPress 2′ /]