One of the largest financial consulting firms in the world that consistently ranks as one of the top global management consulting firms, FTI Consulting, Inc. (NYSE: FCN) seems to be poised for a decline in its price in the near term as per its latest charts.
Bearish Indications
#1 Bearish Divergence between MACD and Price: The daily chart shows that there is a bearish divergence between MACD and price. This is because while the price was making higher highs, MACD was forming lower highs. This usually indicates the possibility of an upcoming bearish move. The bearish divergence is marked as blue color dotted lines in the chart.
Daily Chart – FCN
#2 Below Resistance Level: The daily chart shows that the stock is currently trading below a resistance area. This area is marked as a purple dotted line.
This seems like a good area for the stock to trade lower.#3 Price below MA: The daily chart shows that the stock is currently trading below its short-term moving average of 50-day SMA.
This indicates the overall weakness of the stock.
#4 Supply area: The weekly chart shows that the stock is currently near a supply area, which is marked as an orange ellipse.
The stock had formed long tails during the past few weeks was not able to cross above this level despite multiple attempts. This indicates possible bearishness.
Weekly Chart – FCN
#5 MACD-Price bearish divergence: The weekly chart also shows that there is a bearish divergence between MACD and price. This is marked as blue dotted lines. While the price made higher highs, MACD formed lower highs. This usually foretells the possibility of an upcoming bearish move.
#6 Bearish MACD: The MACD line is currently below the MACD signal line in the weekly chart. This is a possible bearish sign as well.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can take half the intended quantity of short positions on FCN below the price of $113.30.
Once the stock crosses below $105 (which is also the first target price), you can take the rest of the short positions on FCN.
TP: Our target prices in the next 3-6 months are $105, and if it crosses below that price, $95.
SL: To limit risk, place a stop loss at $118.00. Note that this stop loss is on a closing basis.
Our target potential downside is 7% to 16% in the next 3-6 months.
When entering near $113.30: For a risk of $4.70, our target rewards are $8.30 and $18.30. This is a nearly 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 upwards from the resistance area with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
Tara
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