The California-based real estate investment trust company, American Assets Trust, Inc. (NYSE: AAT) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: AAT’s daily chart shows that the stock has been forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts a good support level. Currently, the stock has broken out of the ascending triangle pattern, which is usually a bullish sign.
Daily Chart – AAT
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart.
This typically indicates a bullish setup.
#4 Bullish RSI: The RSI is currently above 50 and moving up, indicating possible bullishness.
#5 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart.
This is a possible bullish indication.
#6 Alligator Awake: William’s Alligator is currently awake up in an upward direction (green line above the red line and blue line) and candles have formed above the three lines in the weekly chart. This indicates a possible bullish bias.
Weekly Chart – AAT
#7 New Uptrend: The weekly chart shows that the stock has currently started a new uptrend. This is a possible bullish sign.
#8 Bullish CCI: The CCI is currently above 150 and moving up, indicating bullish bias.
#9 Near Support Level: The stock shows that there is a strong support level nearby, which is marked as an orange dotted line. This looks like a strong area for bounceback.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for AAT is above the near-term resistance level of around $48. Alternatively, you can also purchase the shares of AAT if it corrects to the breakout level of the ascending triangle pattern at around $46.80.
TP: Our target prices are $55 and $60 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $43.80. Note that this stop loss is on a closing basis.
Our target potential upside is 14% to 39% in the next 4-6 months.
- Entry at $46.80: For a risk of $3.00, the target rewards are $8.20 and $18.20. This is a nearly 1:3 and 1:6 risk-reward trade.
- Entry at $48.00: For a risk of $4.20, the target rewards are $7.00 and $17.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending 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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