The well-known broker that offers an electronic trading platform for the trade of financial assets and provide margin lending and cash management services, TD Ameritrade Holding Corp. (NASDAQ: AMTD) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color lines. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level.
Daily Chart – AMTD
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is rising from below both (+DI) and (-DI).
#4 MACD above Signal Line: The MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#5 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 bullishness.
#6 Above Support area: The weekly chart shows that the stock is currently trading above a long-term support area, which is marked as a pink color dotted line. The stock is also trading above its 50-week MA. All these are possible bullish indications.
Weekly Chart – AMTD
#7 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the weekly chart, indicating bullishness.
#8 Bullish MACD: The weekly chart also shows that the MACD line has currently crossed above the signal line, which is a positive indication.
#9 Bullish ADX and DI: In the weekly chart, the ADX line has started to move up from below –DI and +DI lines. The +DI and ADX lines are also currently above –DI line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for AMTD is around $45.50.
TP: Our target prices are $50 and $55 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $42.50. Note that the stop loss is on a closing basis.
Our target potential upside is 10% to 21% in the next 4-6 months.
For a risk of $3.00, the target rewards are $4.50 and $9.50. This is a nearly 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 ascending 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 its sector.
Happy Trading!
Tara
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