The publicly traded Canadian holding company for the Bell Canada group of companies, which includes telecommunications providers and various mass media assets under its subsidiary Bell Media Inc., BCE Inc. (NYSE: BCE) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Cup and Handle Pattern: The daily chart shows that the stock is currently forming a cup and handle pattern. This is marked in the chart in pink color. A cup and handle pattern is a consolidation and breakout pattern. Whenever a stock breaks out of the cup and handle pattern, it typically moves higher.
Daily Chart – BCE
#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 %K above %D: The %K line of the stochastic is currently above the %D line in the daily chart, indicating bullishness.
#6 Ascending Triangle Pattern: The weekly chart shows that the stock is currently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the 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.
Weekly Chart – BCE
#7 Bullish Stochastic: The weekly chart also shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
#8 Other Bullish Indications: There are also various other positive indications like the bullish ADX and DI, bullish MACD, and price above MAs in the weekly chart. These all point to possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BCE is above the breakout level of the ascending triangle pattern at around $46.30
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 $43.90. Note that the stop loss is on a closing basis.
Our target potential upside is 8% to 19% in the next 4-6 months.
For a risk of $2.40, the target rewards are $3.70 and $8.70. 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 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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