The Ohio-based American corporation specializing in motion and control technologies, Parker-Hannifin Corp (NYSE: PH) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: As you can see from the daily chart, the stock has been trading within a falling wedge pattern during the past few months. This is marked in the daily chart in purple color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
Daily Chart – PH
#2 MACD Above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 Above MAs: In the daily chart of PH, the stock is currently trading above 50-day and 200-day SMA.
This implies that the bulls are in control.
#4 ADX strong: The ADX line is starting to move up from below –DI and +DI lines.
The +DI line is also currently above –DI line.
This indicates possible bullishness.
#5 Price above MAs: The stock is above its 50-week SMA as well as 200-week SMA.
This is a possible bullish sign.
Weekly Chart – PH
#7 Support At Fibonacci Level: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. PH had taken support at the 50% Fibonacci support level of the upmove and now above the 61.8% Fibonacci support level, as seen in the weekly chart. This seems like a good point to bounce up higher.
#8 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line. This is a possible bullish indication.
#9 Other Bullish Indications: The MACD line is currently above the signal line. The ADX and DI also indicate bullishness. All these points to the possibility of an upmove in the near-term.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PH is if it corrects to the breakout level of the falling wedge pattern at around $161.00. For those who prefer a speedier entry, you can buy half the intended quantity of shares at the current price of $175.24.
TP: Our target prices are $185 and $195 in the next 3-6 months.
SL: To limit risk, place stop-loss at $152 (for entry near $161) and $169 (for entry near $175.24). Note that the stop loss is on a closing basis.
Our target potential upside is 6% to 21% in the next 3-6 months.
- Entry at $161: For a risk of $9.00, our target rewards are $24.00 and $34.00. This is a 1:3 and 1:4 risk-reward trade.
- Entry at $175.24: For a risk of $6.24, our target rewards are $9.76 and $19.76. This is a 1:2 and 1:3 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 from the falling wedge pattern with a 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
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