The company that operates Manchester United Football Club, a professional football club, markets and sells sports apparel, training and leisure wear, and other clothing featuring the brand, and sells other licensed products, Manchester United PLC (NYSE: MANU) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Retest of Ascending Triangle pattern Breakout: The daily chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. A breakout from a bullish pattern like this usually indicates the possibility of an upmove in the near-term. Currently, the stock has retested the breakout level of the pattern and is starting to move higher. This is a possible bullish sign.
Daily Chart – MANU
#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 in the daily chart shows bullishness as the +DI line is above the -DI line and the ADX line has moved higher from below the +DI and -DI lines.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, and is also moving higher from oversold levels, indicating possible bullishness.
#5 Consolidation and Breakout: The weekly chart shows that the stock had recently broken out of a downtrend and was trading within a consolidation area. This area is marked in a pink color rectangle in the weekly chart. The stock has broken out of this consolidation area, which is a bullish sign.
Weekly Chart – MANU
#6 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines in the weekly chart. The +DI line and the ADX line are also currently above the –DI line. This indicates possible bullishness.
#7 MACD Above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of MANU above yesterday’s close, at around $17.40.
TP: Our target prices are $20 and $25 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $15.80. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 15% to 44% in the next 3-5 months.
For a risk of $1.60, the target rewards are $2.60 and $7.60. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x 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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