The American retail chain of stores that offers products for home improvement, agriculture, lawn and garden maintenance, and livestock, equine, and pet care, Tractor Supply Company (NASDAQ: TSCO) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Double Bottom Pattern: In the daily chart of TSCO, we can see that the stock is currently forming a double pattern. This pattern is marked in the chart in pink color. A double bottom pattern is a strong bullish pattern and a breakout from it would indicate that the stock could surge higher.
#2 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). This indicates a possible bullish bias.
#3 Bullish RSI: The RSI is currently above 50 and moving up, indicating the strength of the current upmove.
#4 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the daily chart.
This usually indicates bullishness.
#5 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before resuming its upmove.
TSCO had taken support at its 61.8% retracement level before moving higher. This seems like a good support area for the stock.
Weekly Chart – TSCO
#6 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart as well. This usually indicates bullishness.
#7 Price above MA: The stock is currently trading above its long-term moving average of 200-week SMA, indicating the overall bullishness of the stock.
#8 Oversold RSI moving up: The weekly chart shows that the RSI is currently moving up from oversold levels and nearing 50. This is a possible bullish sign, as it indicates the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level of TSCO is above $94.20.
However, for those with a lower risk appetite, you can purchase half the intended quantity of shares of TSCO at the price of $94.20 and the rest if the stock crosses above the double bottom breakout level of $100.
TP: Our target prices are $100 and $110 in the next 3-6 months.
SL: To limit risk, place a stop loss at $90.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 6% to 17% in the next 3-6 months.
For a risk of $3.70, our target rewards are $5.80 and $15.80. This is almost 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 down with high volume from the double bottom 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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