The London-based multinational gambling company that produces slot machines and other gambling technology, International Game Technology PLC (NYSE: IGT) seems to be ready for an upmove in the near term as per its latest charts.
Bullish Indications
#1 Channel Breakout: As you can see from the daily chart of IGT below, the stock has been trading inside a downtrend channel for the past few months. This is marked in the daily chart in pink color. Currently, the stock has broken out of the channel after taking support at the lower end of the channel and started moving up. This is a possible bullish sign.
Daily Chart – IGT
#2 Ascending Triangle Pattern Breakout: The daily chart shows that the stock has broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked in the chart in purple color lines. This also indicates possible bullishness.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color).
This indicates a possible bullish setup.
#5 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines.
The +DI line is also currently above –DI line. This indicates possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. The downtrend line is marked in purple color. This is a bullish sign.
Weekly Chart – IGT
#7 IH&S Pattern: From the weekly chart, we can see that the stock has been 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 possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for IGT is if the stock corrects to the breakout level of the ascending triangle pattern at around $14.80.
However, you can purchase half the intended quantity of shares of IGT if it trades above yesterday’s close, ideally around $16.40.
TP: Our target prices are $20 and $25 in the next 4-6 months.
SL: To limit risk, place a stop loss at $12.90 (for entry near $14.80) and $14.10 (for entry near $16.40) Note that this stop loss is on a closing basis.
Our target potential upside is 21% to 69% in the next 4-6 months.
- Entry at $14.80: For a risk of $1.90, our target rewards are $5.20 and $10.20. This is a 1:3 and 1:5 risk-reward trade.
- Entry at $16.40: For a risk of $2.30, our target rewards are $3.60 and $8.60. This is a 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the support level of the channel and 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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