The American multi-national food company which is currently one of the largest chicken producers in the United States and Puerto Rico and the second-largest chicken producer in Mexico, Pilgrim’s Pride Corporation (NASDAQ: PPC) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was forming a falling wedge pattern for the past few months and has currently broken out of it. This pattern is marked as purple color lines. A falling wedge is a bullish pattern and a breakout from it indicates that the stock may move higher in the short term.
Daily Chart – PPC
#2 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color). It is also moving up from oversold levels. All these are possible bullish indications.
#3 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.
#4 Trading Above MA: The stock is currently trading above its 50-day SMA, which implies that the bulls have started to gain control.
#5 Bullish ADX and DI: The ADX line is currently starting to move up from below –DI and +DI lines. The +DI line is also now above the –DI line. All these indicate possible bullishness.
#6 Above Support Area: The weekly chart shows that the stock is trading above a strong support area, which is marked as a pink color dotted line. This is a possible bullish indication.
Weekly Chart – PPC
#7 Bullish RSI: The weekly chart shows that the RSI is moving higher after reaching oversold levels. This is a possible bullish indication.
#8 Bullish Stoch: The stochastic indicator is also showing bullishness, as the %K line is above the %D line in the weekly chart. It is also moving higher from oversold levels. All these are possible bullish signs.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PPC is above yesterday’s high, at around $16.80.
TP: Our target prices are $20 and $25 in the next 3 to 5 months.
SL: To limit risk, place the stop loss below $14.60. Note that stop loss is on a closing basis.
Our target potential upside is 19% to 49% in the next 4-6 months.
For a risk of $2.20, our target rewards are $3.20 and $8.20. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with a high volume. 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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