The North Dakota-based real estate investment trust company, INVESTORS REAL ESTATE TRUST REIT Common Stock (NYSE: IRET) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Flag Pattern Breakout: As you can see from the daily chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in pink color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern, which is a possible bullish sign.
Daily Chart – IRET
#2 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.
#3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating that the bulls are currently in control.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible 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 has risen up from below both (+DI) and (-DI).
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend and has started a new uptrend.
The downtrend line is marked in purple color. The price is also above the 50-week as well as 200-week MA. All these are possible bullish signs.
Weekly Chart – IRET
#7 Rising Stochastic: The %K line is currently above the %D line in the stochastic of the weekly chart. This indicates possible bullishness.
#8 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart as well. The (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started to rise up from below both (+DI) and (-DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for IRES is above the high of the latest candle. This translates to a price of around $81.50.
TP: Our target prices are $90 and $100 in the next 3-6 months.
SL: To limit risk, place a stop loss at $77.30. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 10% to 23% in the next 3-6 months.
For a risk of $4.20, our first target reward is $8.50 and the second target reward is $18.50. This is a 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 flag pattern breakout level. 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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