The company that designs, markets, and distributes small electric household and specialty housewares appliances, Hamilton Beach Brands Holding Co. (NYSE: HBB) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock was forming a symmetrical triangle pattern. This pattern is shown as orange color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – HBB
#2 Above MAs: The stock is currently trading above its short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, and had moved higher with a very high volume. This indicates an overall bullishness of the stock.
#3 Bullish Stoch: The %K line of the stochastic is above the %D line, which is a possible bullish indication.
#4 Bullish ADX: The ADX line is currently moving up from below –DI and +DI lines.
The +DI line is also currently above –DI line.
All these indicate possible bullishness.
#5 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) has currently crossed above the MACD signal line (orange color). This indicates a possible bullish bias.
#6 Above Support Area: The weekly chart shows that the stock is currently above a support area. This is marked as a pink color dotted line. The current level seems like a good area for the stock to bounce higher.
Weekly Chart – HBB
#7 Bullish MACD: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart as well, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for HBB is if it corrects to the breakout level of the symmetrical triangle pattern, at around $11.00. Alternatively, you can purchase the shares of HBB above the price of $15.00.
TP: Our target prices are $18 and $22 in the next 3-6 months.
SL: To limit risk, place a stop loss at $13.40 (for entry near $15) and $9 (for entry near $11.00). Note that this stop loss is on a closing basis.
Our target potential upside is almost 20% to 100% in the next 3-6 months.
- Entry near $11.00: For a risk of $2.00, our target rewards are $7.00 and $11.00. This is almost 1:4 and 1:6 risk-reward trade.
- Entry near $15.00: For a risk of $1.60, our target rewards are $3.00 and $7.00. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 6x 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 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 regulatory changes in the sector.
Happy Trading!
Tara
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