The intercontinental provider of climate control products for the heating, ventilation, air conditioning, and refrigeration markets who is also known for their Heatcraft Refrigeration and Armstrong brands, Lennox International Inc. (NYSE: LII) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle pattern Breakout: LII’s daily chart shows that the stock has broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in pink color. A breakout from a bullish pattern like this usually indicates the possibility of an upmove in the near-term.
Daily Chart – LII
#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 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color).
This is typically considered as a bullish sign.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#5 Flag Pattern Breakout: The weekly chart shows that the stock has currently broken out of a flag pattern.
This pattern is marked in purple color dotted lines. This is a possible bullish sign.
Weekly Chart – LII
#6 Consolidation and Breakout: The weekly chart shows that the stock had recently broken out of a consolidation area. This area is marked in green color rectangle in the weekly chart. A breakout after consolidation is usually a possible bullish sign.
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 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). This is also a possible bullish sign.
#9 Above MAs: In the weekly chart as well, the stock is currently trading above both its 50-week and 200-week SMA, which implies that the bulls are now in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of LII if it corrects to the gap support level of around $240.
TP: Our target prices are $255 and $270 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $232.20. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 6% to 13% in the next 3-5 months. For a risk of $7.80, the target rewards are $15.00 and $30.00. This is a nearly 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 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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