The independent investment bank that provides advice on mergers, acquisitions, restructurings, financings, and capital raisings to leading corporations, partnerships, institutions and governments across a number of industries, Greenhill & Co., Inc. (NYSE: GHL) seem to be getting ready for a price surge according to its latest charts.
#1 Cup and Handle pattern Breakout: The daily chart of GHL shows that the stock has been forming a cup and handle pattern. This is marked in the chart below in pink color. A cup and handle pattern is a consolidation and breakout pattern. A breakout from this pattern indicates that the stock may move higher. Typically, stocks retrace to the breakout level again before continuing the upmove.
#2 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color). This typically indicates a bullish setup.
#4 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is currently rising from below both (+DI) and (-DI).
All these points to a possible upmove in the near-term.
#6 Bullish Candle: In the weekly chart, the stock had formed a strong bullish candle, which is marked in orange color. This indicates that the stock could move upwards.
#7 Bullish MACD: In the weekly chart as well, the MACD line is above the MACD signal line. This is a possible bullish sign. The stock is also above its 50-week SMA, indicating bullishness in the short term.
#8 Strong RSI: The RSI is above 50 and moving up in the weekly chart, indicating the strength of the current upmove.
#9 Above support level: The stock is currently above a long-term resistance-turned-support area, which is marked as a green dotted line. This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of GHL if it trades above yesterday’s close. This translates to a price of around $21.50.
TP: Our target prices are $25 and $30 in the next 3-6 months. This is based on the breakout level from the cup and handle pattern.
SL: To limit risk, place stop loss at $19.20. Note that the stop loss is on a closing basis.
Our target potential upside is 16% to 30% in the next 3-6 months.
For a risk of $2.30, our target rewards are $3.50 and $8.50. This is a nearly 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 from the cup and handle pattern. 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.
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