One of the foremost providers of IT and professional services in the technology, digital, creative, healthcare technology, engineering, life sciences, and government sector, ASGN Inc. (NYSE: ASGN) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern: The daily chart shows that the stock has been forming a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink color lines. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
Daily Chart – ASGN
#2 IH&S Pattern: As you can see from the daily chart, the stock is currently forming an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in orange color. An IH&S pattern is a strong bullish pattern and a breakout from this pattern indicates that the stock may move higher in the short term.
[hana-code-insert name=’adsense-article’ /]#3 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA.
This usually implies a possible bullish bias for the stock.
#4 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#5 Bullish RSI: The RSI is above 50 and moving up, indicating possible bullishness.
#6 Fibonacci Level Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again.
ASGN had taken support at the 38.2% Fibonacci support level of the upmove, as seen from the weekly chart. This looks like a good area for bounce-back.
Weekly Chart – ASGN
#7 MACD above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#8 Bullish RSI: The weekly chart shows that the RSI is moving up after reaching oversold levels. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal entry level for ASGN is above the breakout level of the IH&S pattern at around $70.
TP: Our target prices are $80 and $90 in the next 3-6 months.
SL: To limit risk, place a stop loss at $65.40. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 14% to 29% in the next 3-6 months. For a risk of $4.60, the target rewards are $10 and $20. 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 IH&S pattern and 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 its sector.
Happy Trading!
Tara
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