The financial services holding company that has the fifth largest banking operations in Argentina, Grupo Financiero Galicia S.A. (NASDAQ: GGAL) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, GGAL has been trading within a falling wedge pattern during the past few months. This is marked in the daily chart in purple color. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up. Currently, the stock has broken out of the falling wedge pattern, indicating bullishness.
Daily Chart – GGAL
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 Above MA: The stock is currently trading its 50-day SMA. This implies that the bulls are currently in control.It also acts as a good support level.
#4 Symmetrical Triangle Pattern Breakout: The daily charts also shows that a symmetrical triangle pattern breakout has occurred.
This is marked in pink color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern. This is a bullish sign.
#5 Other Bullish Indicators: The RSI shows bullishness, as it is currently moving above 50 from oversold levels. The MACD line is above the signal line, and the %K is above %D in the stochastic. All these are possible bullish signs.
#6 Broken Downtrend in Weekly Chart: As evident from the weekly chart, the downtrend of the stock has now been broken and it is now starting a new uptrend. The downtrend line is marked in purple color. This is a bullish sign.
Weekly Chart – GGAL
#7 Oversold RSI: The RSI is moving up after reaching oversold levels. This is a bullish sign.
#8 Bullish Stochastic: The weekly chart shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
#9 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. GGAL has taken support at the 23.6% Fibonacci support level as seen in the weekly chart. So, this seems like a good area for the stock to bounce upwards.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of GGAL at the current price of $26.86.
TP: Our target prices are $35 and $45 in the next 3-5 months.
SL: To limit risk, place stop-loss at $24.40. Note that the stop loss is on a closing basis.
Our target potential upside is 30% to 68% in the next 3-5 months. For a risk of $2.46, our target rewards are $8.14 and $18.14. This is an almost 1:3 and 1:7 risk-reward trade. In other words, this trade offers nearly 3x to 7x 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.
Happy Trading!
Tara
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