The real estate investment trust that invests in apartments in the United States, Camden Property Trust (NYSE: CPT) 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 CPT has recently broken down from a rising wedge pattern that was formed during the past few months. A rising wedge is a bearish pattern and is marked in pink color in the daily chart. Once a stock breaks down from a rising wedge pattern, it typically moves lower in the near-term.
Daily Chart – CPT
#2 MACD below signal line: The MACD line (blue color) is currently below the MACD signal line (orange color), indicating bearishness.
[hana-code-insert name=’adsense-article’ /]#3 Bearish Stochastic: The stochastic in the daily chart is currently moving down.
The %K line is also below the %D line. All these indicate possible bearishness.
#4 Bearish Aroon: The Aroon indicator shows bearishness as the Aroon up is below 30 and the Aroon down is above 70.
#5 Price below MA: The stock is currently trading below the 50-day SMA, which indicates that the bears are currently gaining control.
#6 Resistance level: The daily chart shows that there is a support-turned-resistance level close-by for the stock. This is marked as an orange dotted line. This seems like a good area for the stock to move lower.
#7 MACD below signal line: The MACD line (blue color) is currently below the MACD signal line (orange color) in the weekly chart as well, indicating bearishness.
Weekly Chart – CPT
#8 Selling pressure: The weekly chart shows that after forming a long-tailed candle, the stock was not able to cross above that level. This level is marked as a blue dotted line in the weekly chart. This is another possible bearish sign.
#9 Bearish RSI: The RSI is currently moving down after reaching overbought levels in the weekly chart. This is a possible bearish indication.
#10 %K below %D in Stochastic: In the weekly chart, the stochastic is currently moving down after reaching overbought levels. The %K line is also below the %D line. All these indicate possible bearishness.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can sell the shares of CPT at the current price of $108.20.
TP: Our target prices are $100 and $95 in the next 3-6 months.
SL: To limit risk, place a stop loss at $112. Note that this stop loss is on a closing basis.
Our target potential downside is 8% to 12% in the next 3-6 months.
For a risk of $3.80, our target rewards are $8.20 and $13.20. 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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