The American bank holding company headquartered in Abilene, Texas, First Financial Bankshares Inc. (NASDAQ: FFIN) seem to be poised for a price surge as per its latest charts.
#1 Double Bottom Pattern: From the daily chart of FFIN, we can see that the stock is currently forming a Double Bottom pattern. This is marked in the daily chart in orange color. A double bottom pattern is a strong bullish pattern and indicates a possible upmove in the short term.
#2 %K above %D: The %K line is above the %D line in the stochastic. This is a bullish sign.
#3 Trendline Support: The stock has been on an uptrend since the past several weeks. The uptrend line is marked in purple color.
This indicates that the stock could bounce up from this level.
The stock is also above the 200-day SMA, which also acts a good support level.
#4 Bullish Candle: As you can see from the daily chart, FFIN has formed a big green candle as the latest candle.
This is a strong bullish candle, indicating that there was demand from the support area.
#5 Oversold RSI: The RSI is currently moving up from oversold levels. This is a bullish sign.
#6 RSI – Price Hidden Bullish Divergence: In the weekly chart, there is a hidden bullish divergence between RSI and price. This is marked as blue dotted lines. While the price formed a higher low, the RSI formed a lower low. This is typically considered as a potential buy signal as it indicates underlying strength.
#7 Trading Above MAs: The stock is currently trading above its 50-week as well as 200-week moving averages, indicating a bullish bias for the stock.
#8 Bullish RSI: The RSI is currently above 50 and moving up. This indicates the strength of the stock.
#9 Inside Bar: Currently, a bullish candlestick pattern of inside bar has been formed in the weekly chart. This is the sign of a possible trend reversal to a bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for FFIN is at the current price of $57.30.
TP: Our target prices are $70 and $80 in the next 3-5 months.
SL: To limit risk, place stop-loss at $51.50. Note that stop loss is on a closing basis.
Our target potential upside is 22% to 40% in the next 3-5 months. For a risk of $5.80, our target rewards are $12.70 and $22.70. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the double bottom 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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