The Wisconsin-based manufacturer of products for identifying components used in workplaces, Brady Corp (NYSE: BRC) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As seen in the daily chart, a symmetrical triangle pattern was formed during the past few weeks. This pattern is shown in orange color lines and represents a period of consolidation before the price breaks out.
Daily Chart – BRC
A symmetrical triangle pattern is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line of the pattern occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating bullishness.
#2 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the daily chart, indicating a bullish bias.
#3 Above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are currently in control.
#4 Bullish Stoch: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line 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 has started to rise from below both (+DI) and (-DI) lines.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a strong long-term resistance-turned-support area. This is marked as a purple color line in the weekly chart. This seems like a good area for the stock to surge higher.
Weekly Chart – BRC
#7 %K above %D Line: The %K line (blue color) of the stochastic is currently above the &D line (orange color) in the weekly chart as well, indicating possible bullishness.
#8 Bullish RSI: As you can see from the weekly chart, RSI is currently nearing 50 and moving up, indicating bullishness. The stock is also trading above its 200-week SMA, indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of BRC above the price of $47.50.
TP: Our target prices are $52 and $56 in the next 4-6 months.
SL: To limit risk, place a stop loss at $44.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 10% to 18% in the next 4-6 months.
For a risk of $3.10, our target rewards are $4.50 and $8.50. This is an almost 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 with high volume from the symmetrical triangle pattern. 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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