The leading industrial technology company serving the plastics processing industry, Milacron Holdings Corp (NYSE: MCRN) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock was forming a symmetrical triangle pattern during the past few weeks.
[hana-code-insert name=’adsense-article’ /]This pattern is shown as blue color lines.A symmetrical triangle pattern represents a period of consolidation before the price breaks out and is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers.
Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend.
Currently, the stock has broken out of the symmetrical triangle pattern with high volume, which is a possible bullish sign.
Daily Chart – MCRN
#2 Channel Breakout: The stock was trading within a channel for the past several weeks as seen in the daily chart. This channel is marked on the chart in pink color lines. The stock has currently broken out of the channel, which is a possible bullish sign.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
#4 Above MA: The stock is currently trading above both 50-day as well as 200-day SMA. This implies that the bulls are currently in control.
#5 %K above %D: The %K line is above the %D line in the stochastic. This is a possible bullish sign.
#6 Triple Bottom Pattern Breakout: From the weekly chart, we can see that the stock had recently broken out of a Triple Bottom pattern. This is marked in the chart in pink color. A triple bottom pattern is a bullish consolidation pattern and a breakout from it is another possible sign of an upcoming bullish move.
Weekly Chart – MCRN
#7 Bullish Stochastic: The weekly chart also shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
#8 Bullish MACD: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for MCRN is above the high of the latest candle in the daily chart. This translates to a price above $17.20.
TP: Our target prices are $21 and $26 in the next 4-6 months.
SL: To limit risk, place stop-loss at $14.60. Note that the stop loss is on a closing basis.
Our target potential upside is 22% to 51% in the next 4-6 months.
For a risk of $2.60, our target rewards are $3.80 and $8.80. This is an almost 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel and the channel breakout with a 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=’stansberry-article’ /]