The popular footwear designer and distributor based in Goleta, California that does business as Deckers Brands, Deckers Outdoor Corp (NYSE: DECK) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, DECK has been trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in pink color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
Daily Chart – DECK
#2 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.
[hana-code-insert name=’adsense-article’ /]#3 %K above %D: The %K line is above the %D line in the stochastic. This is a bullish sign.
#4 Above MAs: In the daily chart, 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 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 Unbroken Uptrend in Weekly Chart: As evident from the weekly chart, the stock’s prevailing uptrend is still unbroken. This is a bullish sign. The stock is also above its 50-week and 200-week SMA, which indicates that the bulls are currently in control.
Weekly Chart – DECK
#7 Strong RSI: The RSI is above 50 and moving up in the weekly chart. This is a bullish sign.
#8 Bullish Stochastic: The weekly chart shows that the %K line is above the %D line in the stochastic. The indicator is also moving up from oversold levels. All this indicates that an upmove may be imminent.
#9 Double Bottom Pattern: The weekly chart shows that the stock has currently formed a double bottom pattern. This double bottom pattern is marked in the weekly chart in orange color. This is a bullish reversal pattern and the breakout from it usually indicates that the stock could move upwards.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for DECK is above the price of $158.80.
TP: Our target prices are $170 and $180 in the next 4-6 months.
SL: To limit risk, place stop-loss at $151.40. Note that the stop loss is on a closing basis.
Our target potential upside is 7% to 13% in the next 4-6 months.
For a risk of $7.40, our target rewards are $11.20 and $21.20. 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 falling wedge pattern 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
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