The Mexican multimedia mass media company touted as the largest producer of Spanish-language content, Grupo Televisa SAB ADR (NYSE: TV) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Flag Pattern Breakout: As you can see from the daily chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern, which is a possible bullish sign.
Daily Chart – TV
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color). This is a possible bullish setup.
#3 Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating that the bulls are still in control.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line and the ADX line are greater than the (-DI) line and the ADX line is moving higher.
#5 Near Resistance Area: The weekly chart shows that the stock is currently near a resistance area, which is marked as a purple color dotted line. Once the stock crosses above this level, it could surge higher.
Weekly Chart – TV
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of the prevailing downtrend and is moving higher. The downtrend line is marked in pink color. The stock is also currently trading above its 50-week SMA. All these are possible bullish indications.
#7 Bullish MACD: The MACD line (blue color) is above the MACD signal line (orange color) in the weekly chart as well, indicating a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for TV is above the near-term resistance area. This translates to a price of around $12.70.
TP: Our target prices are $16 and $20 in the next 3-6 months.
SL: To limit risk, place a stop loss at $10.80. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 26% to 58% in the next 3-6 months.
For a risk of $1.90, our first target reward is $3.30 and the second target reward is $7.30. 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 flag 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 new government rules or regulatory changes in its sector.
Happy Trading!
— Tara
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