The American industrial conglomerate that is a full-service audio, video, electrical, and networking company, Teledyne Technologies Incorporated (NYSE: TDY) seems to be poised for a decline in its price in the near term as per its latest charts.
Bearish Indications
#1 Rising Wedge Pattern Breakdown: The daily chart shows that TDY has recently broken down from a rising wedge pattern that was formed during the past few months. This is a bearish pattern and is marked in orange color in the daily chart. Once a stock breaks down from the bottom of the rising wedge pattern, it typically moves lower in the near-term. Currently, the stock has broken down from the rising wedge pattern.
Daily Chart – TDY
#2 %K below %D in Stochastic: The %K line is currently below the %D line in stochastic of the daily chart. It is also moving down from overbought levels. All these indicate possible bearishness.
#3 Bearish Divergence between RSI and Price: The daily chart shows that there is a bearish divergence between RSI and price.
[hana-code-insert name=’adsense-article’ /]This is because while the price was making higher highs, RSI was forming lower highs.This usually indicates the possibility of an upcoming bearish move.
This bearish divergence is marked as blue dotted lines.
#4 Bearish RSI: The daily chart shows that the RSI is currently moving down from overbought levels.
This is a possible bearish sign.
#5 Supply area: The weekly chart shows that the stock is currently near a supply area, which is marked as a pink rectangle. The stock was not able to cross above this level even after multiple weeks. This indicates possible bearishness.
Weekly Chart – TDY
#6 Bearish Stochastic: The stochastic in the weekly chart is near overbought levels and moving down. The %K line has also crossed below the %D line. All these indicate possible bearishness.
#7 Bearish RSI: The RSI is currently moving down after reaching overbought levels in the weekly chart, indicating possible bearishness.
#8 CCI down: The CCI indicator is currently moving down after reaching above +200 in the weekly chart, indicating possible bearishness.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can take short positions on TDY below the price of around $317.50.
TP: Our target prices are $300 and $280 in the next 3-6 months.
SL: To limit risk, place a stop loss at $326. Note that this stop loss is on a closing basis.
Our target potential downside is 6% to 12% in the next 3-6 months.
For a risk of $8.50, our target rewards are $17.50 and $37.50. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks upwards from the rising wedge pattern with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
Tara
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