The American multinational information technology company headquartered in Palo Alto, California, HP Inc. (NYSE: HPQ) seems to be gearing up for a price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: A symmetrical triangle pattern has been formed in the daily chart as shown below. This is marked in purple color lines. This pattern is usually formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. It represents a period of consolidation before the price breaks out or breaks down. Currently, the stock has broken out of the symmetrical triangle pattern. This usually signifies the start of a new bullish trend.
Daily Chart – HPQ
#2 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
[hana-code-insert name=’adsense-article’ /]#3 Above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are currently in control.
#4 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color).
This is a possible bullish setup.
#5 Falling Wedge Pattern: As you can see from the daily chart, the stock has been forming a falling wedge pattern for the past several months.
It has typically taken support at the bottom of the wedge before bouncing back.
The stock is currently moving up after taking support at the bottom of the wedge, which is a possible bullish sign.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. HPQ had taken support at the 50% Fibonacci support level as seen in the weekly chart. This is also a strong resistance-turned-support area. As indicated by the blue dotted line, the stock has taken support here multiple times. This seems like a strong support area for the stock.
Weekly Chart – HPQ
#6 MACD above Signal Line: In the weekly chart as well, the MACD line (blue color) is above the MACD signal line (orange color). This is a possible bullish setup.
#7 Bullish RSI: The RSI is currently near 50 and moving up, indicating possible bullishness.
#8 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the weekly chart as well, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for HPQ is above the resistance level of $20.70.
TP: Our first target price is $24 and the second target price is $27 in the next 4-6 months.
SL: To limit risk, place a stop loss at $19.20. Note that this stop loss is on a closing basis.
Our target potential upside is almost 16% to 30% in the next 4-6 months. For a risk of $1.50, our first target reward is $3.30 and the second target reward is $6.30. This is a 1:2 and 1:4 risk-rewards 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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