The American investor-owned utility headquartered in the Pacific Gas & Electric Building, in San Francisco, California, PG&E Corporation (NYSE: PCG) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Channel Breakout: The daily chart of PCG shows that the stock was trading within a channel for the past few months. This channel is marked on the daily chart in purple color. Currently, the stock has broken out of the channel. This seems like a possible bullish indication.
Daily Chart – PCG
#2 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is rising from below both (+DI) and (-DI). These point to a possible upmove in the near-term.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color).
This is a possible bullish setup.
#4 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating that the bulls are currently in control.
#5 IH&S Pattern Breakout: The daily chart shows that the stock has been forming an inverted head and shoulders pattern.
This pattern is marked in pink color. A breakout from a bullish pattern like IH&S pattern indicates the possibility of an upmove. Currently, the stock has broken out of the IH&S pattern, indicating possible bullishness.
#6 RSI-Price Bullish Divergence: The weekly chart shows that there is a bullish divergence between RSI and price. While the price formed a lower low, the RSI formed to a higher low. This is marked as pink dotted lines in the chart. This is a possible bullish sign.
Weekly Chart – PCG
#7 Bullish Stochastic: The %K line is currently above the %D line in the stochastic and moving up. This indicates possible bullishness.
#8 Bullish RSI: Relative strength index (RSI) is currently above 50 after moving up from oversold levels in the weekly chart. This indicates the strength of the current upmove.
#9 MACD above Signal Line: The weekly chart also shows that the MACD line (blue color) is above the MACD signal line (orange color). This is a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of PCG if it trades above yesterday’s close. This translates to a price of around $15.00.
TP: Our target prices are $20 and $25 in the next 3-6 months.
SL: To limit risk, place a stop loss at $11.80. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 33% to 67% in the next 3-6 months.
For a risk of $3.20, our first target reward is $5.00 and the second target reward is $10.00. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel breakout level with high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any new government rules or regulatory changes in its sector.
Happy Trading!
Tara
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