The bank holding company headquartered in the Regions Center in Birmingham, Alabama that provides retail banking and commercial banking, trust, stock brokerage, and mortgage services, Regions Financial Corp (NYSE: RF) seem 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 purple lines. Currently, the stock is near the upper rail of the symmetrical triangle pattern. A breakout from this pattern usually signifies the start of a bullish move.
Daily Chart – RF
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA. This usually implies a possible bullish bias for the stock.
[hana-code-insert name=’adsense-article’ /]#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color).
This is a possible bullish setup.
#4 %K above %D: The %K line of the stochastic is currently above the %D line in the daily chart, indicating possible bullishness.
#5 Strong Support Area: As per the weekly chart, the stock seems to have bounced higher from a strong support area.
This is marked as a green dotted line.
This area is near the key 50% Fibonacci retracement level, and the stock had taken support here multiple times during the past several weeks.
This current upmove from the support area seems like a possible bullish indication.
Weekly Chart – RF
#6 Bullish RSI: The RSI is currently near 50 and moving up, indicating possible bullishness.
#7 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart too, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for RF is the stock breaks out of the symmetrical triangle and closes above the near-term resistance level at around $15.60. For those with a higher risk appetite, you can purchase half the intended quantity of stocks at the current price of $14.94.
TP: Our target prices are $20 and $25 in the next 3-6 months.
SL: To limit risk, place a stop loss at $12.80. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 28% to 67% in the next 3-6 months.
- Entry at $14.94: For a risk of $2.14, the target rewards are $5.06 and $10.06. This is a nearly 1:2 and 1:5 risk-reward trade.
- Entry at $15.60: For a risk of $2.80, the target rewards are $4.40 and $9.40. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 5x 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 its sector.
Happy Trading!
Tara
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