The American multinational mass media corporation that is based in Midtown Manhattan, New York City, Twenty-First Century Fox, Inc. Class B (NASDAQ: FOX) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Consolidation Area, Ready for Breakout: The daily chart shows that the stock has been trading within a range since the past several months. This area is marked as a purple color rectangle in the daily chart. A breakout from this consolidation area would indicate possible bullishness.
Daily Chart – FOX
#2 Above MAs: The stock is currently trading above its 50-day SMA as well as 200-day SMA. This indicates overall bullishness for the stock.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Stochastic: Currently, the %K line of the stochastic has crossed above the %D line, indicating possible bullishness.
#4 Bullish RSI: Relative strength index (RSI) is currently moving up from oversold levels.
This indicates the price may reverse to upside soon.
#5 Flag Pattern: As seen from the weekly chart of FOX, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range.
This is a classic flag pattern and is marked in the chart in purple color.
A flag is a continuation pattern. Whenever a stock breaks out of this pattern, it typically continues its previous trend (uptrend in this case).
Weekly Chart – FOX
#6: Bullish CCI: In the weekly chart, CCI is moving up and has crossed above 50. This is a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the shares of FOX can be purchased in two scenarios:
- If the stock breaks out above the flag pattern at around $49.50.
- If the stock corrects to the bottom of the flag pattern at around $44
Note: For those with higher risk appetite, you can purchase half the intended quantity of shares of FOX at the current price of $47.50 with a stop-loss of $45.
TP: Our target prices are $58 and $65 in the next 3-6 months.
SL: To limit risk, place a stop loss near $45 (for entry near $49.50) and $42.90 (for entry near $44). Note that the stop loss is on a closing basis.
Our target potential upside is 17% to 47% in the next 3-6 months.
- Entry at $44: For a risk of $1.10, our first target reward is $14.00 and the second target reward is $21.00. This is a nearly 1:12 and 1:19 risk-reward trade.
- Entry at $47.53: For a risk of $2.53, our first target reward is $10.47 and the second target reward is $17.47. This is a nearly 1:4 and 1:7 risk-reward trade.
- Entry at $49.50: For a risk of $4.50, our first target reward is $8.50 and second target reward is $15.50. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 19x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the flag 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
[hana-code-insert name=’oxford 2′ /]