The American multinational personal care corporation that produces mostly paper-based consumer products, Kimberly Clark Corp (NYSE: KMB) seem to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern: KMB’s 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 breakout from an ascending triangle pattern generally indicates the start of another bullish trend. The breakout level also acts a good support level.
Daily Chart – KMB
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#4 Bullish RSI: The daily chart shows that the RSI is currently above 50, indicating bullishness.
#5 Doji: The latest candle is a doji, indicating indecisiveness among buyers and sellers.
Once the stock closes above the high of the Doji, it usually indicates the beginning of an uptrend.
#6 Downtrend Broken: The weekly chart of KMB shows that the stock has currently broken out from the short-term downtrend. This is a possible bullish sign. This downtrend line is marked in purple color in the weekly chart below.
Weekly Chart – KMB
#7 MACD above Signal Line: In the weekly chart, the MACD line is above the MACD signal line which is a bullish signal. The stock is also trading above its 50-week SMA, indicating that the bulls are presently gaining control.
#8 Hammer: The latest candlestick on the weekly chart is a hammer, which is a bullish reversal candle.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of KMB above the high of the daily chart’s Doji candlestick pattern. This translates to a price of around $115.20. The rest of the shares can be purchased if the stock breaks out from the ascending triangle pattern at around $120.00.
TP: Our target prices are $135 and $145 based on the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $109.80. Note that this stop loss is on a closing basis.
Our target potential upside is 13% to 26% in the next 4-6 months.
Entry near $115.20: For a risk of $5.40, the target rewards are $19.80 and $29.80. This is a nearly 1:4 and 1:6 risk-reward trade.
Entry near $120.00: For a risk of $10.20, the target reward (TP#2) is are $25.00. This is a nearly 1:3 risk-reward trade.
In other words, this trade offers nearly 3x to 6x 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.
Happy Trading!
Tara
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