The specialty chemical manufacturing enterprise with corporate headquarters in Charlotte, North Carolina, Albemarle Corporation (NYSE: ALB) seems to be getting ready for a price surge according to its charts.
Bullish Indications
#1 Near support area: As seen from the daily chart, the stock is currently near a support area. This is marked as a pink dotted line. This seems like a good area for the stock to bounce higher.
Daily Chart – ALB
#2 Candle near lower Bollinger band: The daily chart shows that the latest candle has closed below the lower band of the Bollinger band. At the same time, RSI is currently below 30 and looks ready for a reversal. Once the next candle closes within the lower Bollinger band and RSI moves above 30, the stock may surge higher.
#3 Oversold Stoch: The stochastic indicator is currently near oversold levels and slowly moving up from those levels.
This points to the possibility of a reversal in the price in the near-term.
#4 Oversold RSI: In the daily chart, the RSI is currently near oversold levels and starting to move up.
This is a possible sign of an upcoming bullish reversal.
#5 Near support level of broken downtrend: As you can see from the weekly chart, the stock had recently broken out of a downtrend.
This downtrend line is marked in purple color. The stock has currently taken support near the breakout level of that downtrend line. This seems like a good area for the stock to reverse and surge higher.
Weekly Chart – ALB
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. ALB has currently taken support at the 23.6% Fibonacci support level as seen in the weekly chart. So, this seems like a strong support area for the stock.
#7 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the weekly chart. This typically indicates a bullish setup.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for ALB is if it trades above yesterday’s close. This translates to a price of $64.80.
TP: Our target prices are $70 and $80 in the next 4-6 months.
SL: To limit risk, place a stop loss at $61.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 8% to 24% in the next 4-6 months.
For a risk of $3.40, our target rewards are $5.20 and $15.20. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the support levels. 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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