The American multinational delivery services company headquartered in Memphis, Tennessee, FedEx Corporation (NYSE: FDX) 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 was recently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple 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. Currently, the stock has broken out of the ascending triangle pattern, which is usually a bullish sign.
Daily Chart – FDX
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
#3 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX lines are also currently above –DI line.
All these indicate possible bullishness.
#4 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 possible bullishness.
#5 MACD above signal line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This is a bullish indication.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of the prevailing downtrend. The downtrend line is shown in pink color. The stock is also trading above its 50-week as well as 200-week SMA. This is a possible bullish indication.
Weekly Chart – FDX
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart as well. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for FDX is if it corrects to the price of around $180 to $185.
Alternatively, you can purchase half the intended quantity of shares of FDX if it trades above the price of $200.00.
TP: Our target prices are $210 and $220 in the near-term.
SL: To limit risk, place a stop loss near $168.00 (for entry near $183) and $194.00 (for entry near $200). Note that this stop loss is on a closing basis.
Our target potential upside is 5% to 20% in the next 3-6 months.
- Entry near $183: For a risk of $15.00, the target rewards are $27.00 and $37.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $200: For a risk of $6.00, the target rewards are $10.00 and $20.00. 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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