The holding corporation for the Metropolitan Life Insurance Company, better known as MetLife, and its affiliates and one of the largest global providers of insurance, annuities, and employee benefit programs, Metlife Inc. (NYSE: MET) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Pattern: The daily chart of MET shows that the stock has been trading within a falling wedge pattern during the past few months. This is marked in the chart in purple color. Currently, the stock has broken out of the falling wedge pattern after reaching the bottom rail of the falling wedge pattern. This usually indicates that the stock has the potential to move further up.
Daily Chart – MET
#2 Double Bottom Pattern: Within the falling wedge pattern, 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 bullish reversal pattern and a breakout from it indicates that the stock could possibly move upwards.
[hana-code-insert name=’adsense-article’ /]#3 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 bias.
#4 Price above MAs: The stock is currently above both 50-day as well as 200-day SMA, indicating that the bulls have currently gained control.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again.
MET has taken support at the 23.8% Fibonacci support level of the upmove, as seen in the weekly chart. This is a possible bullish sign.
Weekly Chart – MET
#7 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#8 Bullish RSI: The weekly chart shows that the RSI is moving up above 50 after reaching near oversold levels. This is a possible bullish sign.
#9 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is also a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for the stock is in two scenarios
- If the stock closes above the resistance level of $48.80.
- If the stock corrects to the breakout level of the falling wedge pattern at around $43.
TP: Our target prices are $55 and $60 in the next 3 to 6 months.
SL: To limit risk, place a stop loss below $41.50 (for entry near $43) and $46.50 (for entry near $48.80). Note that this stop loss is on a closing basis.
Our target potential upside is almost 13% to 40% in the next 3-6 months.
- Entry at $43.00: For a risk of $1.50, our first target reward is $12.00 and the second target reward is $17.00. This is a nearly 1:8 and 1:11 risk-reward trade.
- Entry at $48.80: For a risk of $2.30, our first target reward is $6.20 and the second target reward is $11.20. This is a nearly 1:3 and 1:5 risk-reward trade
In other words, this trade offers nearly 3x to 11x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge 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 the sector.
Happy Trading!
Tara
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