The company that is a Global Market Leader in Specialty Minerals, Minerals-Based Synthetic Mineral Products, and Related Systems and Services, Minerals Technologies Inc. (NYSE: MTX) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: MTX’s daily chart shows that the stock was recently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level. Currently, the stock has broken out of the ascending triangle pattern, which is usually a bullish sign.
Daily Chart – MTX
#2 Channel Breakout: As you can see from the daily chart, the stock was trading within a downtrend channel during the past few weeks. This is marked in the daily chart in orange color. Currently, the stock has broken out of this channel and is moving up. This is a possible bullish sign.
[hana-code-insert name=’adsense-article’ /]#3 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
#4 Bullish ADX and DI: The ADX line is starting to move up from below –DI and +DI lines.
The +DI line is also currently above –DI line. All these indicate possible bullishness.
#5 MACD above signal line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#6 Bullish RSI: The RSI is currently above 50, indicating possible bullishness.
#7 IH&S Pattern Breakout: From the weekly chart, we can see that the stock was consolidating in the form of an Inverted Head and Shoulders (IH&S) pattern. This is marked in the chart in pink color. An IH&S pattern is a bullish pattern. A breakout from an IH&S pattern is usually the sign of an upcoming bullish move. Currently, the stock has broken out of the IH&S pattern, indicating a possible bullish bias.
Weekly Chart – MTX
#8 MACD above Signal Line: In the weekly chart, the MACD line is above the MACD signal line which is a bullish signal.
#9 MACD -Price Bullish Divergence: There is a bullish divergence between MACD and price in the weekly chart. While the price formed a lower low, the MACD formed to a higher low. This is marked as blue dotted lines in the chart. A bullish divergence is usually the sign of a possible upmove in the near-term.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of MTX at the current price of $56.97.
TP: Our target prices are $64 and $75 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $52.90. Note that this stop loss is on a closing basis.
Our target potential upside is 12% to 32% in the next 4-6 months.
For a risk of $4.07, the target rewards are $7.03 and $18.03. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, 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 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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