The Fortune 500 company for midstream petroleum services, headquartered in Denver, Colorado, DCP Midstream LP Unit (NYSE: DCP) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart of DCP shows that the stock was trading within a falling wedge pattern during the past few months. This pattern is marked in the daily chart in purple color. The stock has currently broken out from it. Once the stock moves breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – DCP
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
It is also moving up from oversold levels.
This points to the possibility of an upmove in the near-term.
#4 RSI Strong: Relative strength index (RSI) is currently moving up from oversold levels and nearing 50.
This indicates the strength of the current upmove.
#5 %K above %D in Stoch: The %K line (blue color) is above the %D (orange color) of the stochastic in the weekly chart as well.
Stochastic is also moving up from oversold levels. These are all possible bullish signs.
Weekly Chart – DCP
#6 RSI –Price Bullish Divergence: There is a bullish divergence between RSI and price in the weekly chart. While the price formed a lower low, the RSI formed to a higher low. This is marked as purple dotted lines in the weekly chart. This is a possible bullish sign.
#7 Bullish RSI: The RSI is currently moving up from oversold levels in the weekly chart. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for DCP is above the resistance level of $23.50.
TP: Our target prices are $28 and $34 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $21.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 19% to 45% in the next 4-6 months.
For a risk of $2.20, our first target reward is $4.50 and the second target reward is $10.50. This is a nearly 1:2 and 1:5 risk-reward trade.
Overall, 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 with high volume from the falling wedge 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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