The company that owns and acquires mineral and royalty interests in oil and natural gas properties in the United States, Kimbell Royalty Partners LP (NYSE: KRP) seems to be gearing up for a price surge according to its latest charts.
Bullish Indications
#1 Descending Triangle Pattern Breakout: The stock’s daily chart shows that it has recently broken out of a descending triangle pattern in an upward direction. This descending triangle pattern is marked in orange color on the daily chart. An upward breakout from a bearish pattern like a descending Triangle is typically a good bullish sign.
#2 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Price above MA: The stock is currently trading above its 50-day SMA.
This shows that the bulls are currently in control.
#4 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.
#5 Bullish Stochastic: The stochastic shows that the %K line is above the %D line.
This indicates an overall bullishness.
#6 Multiple Bottom Pattern Breakout: The daily chart shows that the stock has currently broken out of a multiple bottom pattern. This pattern is marked in pink color. This pattern is a strong bullish pattern and a breakout from it usually foretells the possibility of an upmove in the short term.
#7 Broken Downtrend: The weekly chart shows that the stock had broken out of a prevailing downtrend. This downtrend line is marked in purple color. This seems like a possible bullish sign.
#8 %K above %D: The stochastics reveal that the %K line is currently above the %D line in the weekly chart as well. This is a possible bullish sign.
#9 Bullish RSI: In the weekly chart, the RSI is above 50 and moving up. This is a possible bullish sign.
#10 Bullish MACD: The MACD line (blue color) is currently above the MACD signal line (orange color) in the weekly chart as well. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for KRP is above the tail of yesterday’s candle. This translates to a price of around $16.10.
TP: Our target prices are $19 and $24 in the next 3-6 months.
SL: To limit risk, place a stop loss at $14.20. Note that the stop loss is on a closing basis.
Our target potential upside is almost 18% to 49% in the next 3-6 months.
For a risk of $1.90, our target rewards are $2.90 and $7.90. This is a 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 breakout level of the descending 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 the sector.
Happy trading!
Tara
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