The international supplier of aerospace services, structures, systems, and support that engineers, designs, and manufactures aircraft components, systems, and accessories, Triumph Group Inc. (NYSE: TGI) shows signs of an upcoming price surge according to its latest charts.
#1 IH&S Breakout in Daily chart: As you can see from the daily chart of TGI below, the stock has currently broken out of 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 the breakout from it indicates that the stock may move higher in the short term.
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day moving averages, indicating a bullish bias for the stock.
[hana-code-insert name=’adsense-article’ /]#3 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color).
When this happens, a potential buy signal is generated.
#4 Bullish ADX and DI: The ADX indicator shows bullishness as (+DI) is greater than (-DI) and ADX line, and the ADX line is rising.
This points to a possible upmove in the near-term.
#5 Bullish Stochastic: As you can see from the daily chart, the %K line (blue color) is currently above the %D line (orange color), indicating a possible bullish bias.
#6 Broken Downtrend: As you can see from the weekly chart, the stock was in a downtrend since the past few years. This downtrend is marked in the chart as a purple line. Currently, the stock has broken out from this downtrend, indicating possible bullishness.
#7 Bullish MACD: The weekly chart also shows that the MACD (light blue color) is currently above the MACD signal line (orange color), indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of TGI if it opens above Friday’s close. This translates to a price of around $24. The rest of the shares can be purchased if the stock closes above the upper wick of Friday’s candle, at around $26.
TP: Our first target price is $33 and the second target price is $36 in the next 3-6 months based on the IH&S pattern breakout.
SL: To limit risk, place a stop loss below $20.50 (for entry near $24) and $22.20 (for entry near $26). Note that this stop loss is on a closing basis.
Our target potential upside is almost 27% to 50% in the next 3-6 months.
- Entry at $24: For a risk of $3.50, our first target reward is $9.00 and second target reward is $12.00. This is a 1:2 and 1:3 risk-reward trade.
- Entry at $26: For a risk of $3.80, our first target reward is $7.00 and second target reward is $10.00. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the Inverted Head and Shoulders pattern breakout level. 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.
— Tara Young[hana-code-insert name=’oxford 1′ /]