The specialty chemical manufacturing enterprise with corporate headquarters in Charlotte, North Carolina, Albemarle Corporation (NYSE: ALB) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart of ALB shows that the stock was trading within a falling wedge pattern during the past few months. This pattern is marked in the daily chart in purple color. The stock has currently broken out from it. Once the stock moves breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – ALB
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 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.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
These point to a possible upmove in the near-term.
#5 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again.
ALB has taken support at the 23.6% Fibonacci support level of the upmove, as seen in the weekly chart. This is a possible bullish sign.
Weekly Chart – ALB
#6 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
#7 MACDI –Price Bullish Divergence: There is a bullish divergence between MACD and price in the daily chart. While the price formed a lower low, the MACD formed to a higher low. This is marked as blue dotted lines in the daily chart. This is a bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for ALB is above the resistance level of $75.
However, for those with a higher risk appetite, you can purchase one-fourth the intended quantity of shares of ALB if it opens above the high of yesterday’s candle, at around $71.
TP: Our target prices are $84 and $92 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $66.20 (for entry near $71) and $70.40 (for entry near $75). Note that this stop loss is on a closing basis.
Our target potential upside is almost 12% to 30% in the next 4-6 months.
- Entry near $71: For a risk of $4.80, our first target reward is $13.00 and the second target reward is $21.00. This is a nearly 1:3 and 1:4 risk-reward trade.
- Entry near $75: For a risk of $4.60, our first target reward is $9.00 and the second target reward is $17.00. This is a nearly 1:2 and 1:4 risk-reward trade.
Overall, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge 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 the sector.
Happy Trading!
Tara
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