The American worldwide health services organization based in suburban Bloomfield, Connecticut and Philadelphia, Pennsylvania, Cigna Corp (NYSE: CI) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, CI had recently formed a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating bullishness.
Daily Chart – CI
#2 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the daily chart, indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating that the bulls are currently in control.
#4 %K above %D in Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line.
This indicates possible bullishness.
#5 Bullish RSI: The daily chart shows that the RSI is above 50 and moving up, indicating possible bullishness.
#6 Cup and Handle Pattern: As you can see from the weekly chart, the stock is currently forming a Cup and Handle pattern.
This is marked in orange color. A cup and handle pattern is a bullish pattern and a breakout from it indicates that the stock could possibly move upwards.
Weekly Chart – CI
#7 Bullish RSI: The weekly chart shows that the RSI is above 50 and moving up, indicating bullishness.
#8 Price above MAs: In the weekly chart as well, the stock is trading above its 50-week and 200-week SMA, indicating bullishness.
#9 Near Support Level: The weekly chart shows that there is a resistance-turned-support level close by for the stock. This is marked in pink color dotted line. This seems like a good area for the stock to bounce back upwards.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for CI is if it crosses above the resistance level of $200.
TP: Our target prices are $210 and $220 in the next 4-6 months.
SL: To limit risk, place a stop loss at $194.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 5% to 10% in the next 4-6 months. For a risk of $5.50, our target rewards are $10.00 and $20.00. This is an almost 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 with high volume from the symmetrical 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 the sector.
Happy Trading!
Tara
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