The popular telecommunications company and American multinational conglomerate holding company headquartered at Whitacre Tower in downtown Dallas, Texas, AT&T Inc. (NYSE: T) seem to be gearing up for a price surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern breakout: AT&T’s daily chart shows that the stock has currently broken out of 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.
Daily Chart – AT&T
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a bullish bias.
#4 Bullish ADX: The ADX line has currently moved up from below –DI and +DI lines.
The +DI as well as ADX lines are also currently above –DI line.
This indicates possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of the prevailing short-term downtrend. This downtrend line is marked in purple color in the weekly chart below. A break out from downtrend is usually a bullish sign.
Weekly Chart – AT&T
#7 MACD above Signal Line: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal. The stock is also trading above its 50-week SMA, indicating that the bulls are still in control.
#8 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart, 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 AT&T is if the stock corrects to the breakout level of the ascending triangle pattern at around $32 to $33.
However, for those with higher risk appetite, you can purchase half the intended quantity of shares of AT&T at the current price of $34.25.
TP: Our target prices are $40 and $45 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss at $31. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 16% to 38% in the next 4-6 months.
- Entry near $32.50: For a risk of $1.50, the target rewards are $7.50 and $12.50. This is a nearly 1:5 and 1:8 risk-reward trade.
- Entry near $34.25: For a risk of $3.25, the target rewards are $5.75 and $10.75. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 8x 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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