The South Carolina-based bank holding company for First Community Bank, First Community Corp (NASDAQ: FCCO) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart of FCCO, the stock has been forming a falling wedge pattern for the past several weeks. This pattern is marked in purple color in the daily chart. The stock had typically taken support at the bottom of the wedge before bouncing back. Currently, it has broken out of the falling wedge pattern, indicating possible bullishness.
Daily Chart – FCCO
#2 %K above %D: The %K line of the stochastic is currently above the %D line in the daily chart, indicating bullishness.
[hana-code-insert name=’adsense-article’ /]The stochastic is also near oversold levels, indicating that a possible bullish reversal is around the corner.#3 Oversold RSI: The RSI is currently moving up from oversold levels, indicating possible bullishness.
#4 CCI-Price positive divergence: In the weekly chart of FCCO, the CCI is moving up after reaching below -250, indicating bullishness.
There is also a CCI-Price positive divergence on the weekly chart.
The CCI made a higher low while the price made a lower low.
This is marked on the chart as blue dotted lines. This indicates that the selling pressure is reducing and the stock may move higher.
Weekly Chart – FCCO
#5 Inside Bar: Currently, a bullish candlestick pattern of an inside bar has been formed in the weekly chart. This is marked as a pink ellipse. This is the sign of possible bullish bias.
#6 Oversold RSI: The RSI is currently near oversold levels in the weekly chart as well, indicating that a possible reversal is around the corner.
#7 Near Support Area: The weekly chart shows that the stock is currently trading near a resistance-turned-support level. This is marked as an orange dotted line. This seems like a good area for a reversal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for FCCO is above the resistance level of $18.70.
TP: Our target prices are $24 and $30 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $15.80. Note that the stop loss is on a closing basis.
Our target potential upside is 28% to 60% in the next 3-6 months. For a risk of $2.90, our first target reward is $5.30 and the second target reward is $11.30. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 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 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
[hana-code-insert name=’oxford 2′ /]