The floral and foods gift retailer and distribution company in the United States, 1-800-Flowers.Com Inc. (NASDAQ: FLWS) 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 trading within a falling wedge pattern during the past few months. This is marked in the daily chart in purple color lines. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up. Currently, the stock has broken out of the falling wedge pattern, indicating bullishness.
Daily Chart – FLWS
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
#3 Above MAs: The stock is currently trading above both its 50-day as well as 200-day SMA. This implies that the bulls are currently in control. These MAs also act as a good support level.
#4 Bullish Stochastic: The daily chart shows that the %K line is above the %D line in the stochastic and is also moving higher from oversold levels. This is a possible bullish indication.
#5 Bullish ADX and DI: The daily chart shows that the ADX line has moved higher from below the –DI and +DI lines. The +DI line and the ADX line are also currently above –DI line. All these indicate possible bullishness.
#6 Ascending Triangle Pattern: The weekly charts shows that the stock was been forming an ascending triangle pattern. This is marked as pink color lines. An Ascending Triangle pattern is a bullish pattern. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.
Weekly Chart – FLWS
#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.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of FLWS above yesterday’s close, at around $30.00. The rest of the shares can be purchased above the breakout level of the ascending triangle pattern, at around $32.10.
TP: Our target prices are $35 and $40 in the next 3-5 months.
SL: To limit risk, place stop-loss at $30.20 (for entry near $32.10) and $26.90 (for entry near 30.00). Note that the stop loss is on a closing basis.
Our target potential upside is 9% to 33% in the next 3-5 months.
- Entry at $30.00: For a risk of $3.10, our target rewards are $5.00 and $10.00. This is an almost 1:2 and 1:3 risk-reward trade.
- Entry at $32.10: For a risk of $1.90, our target rewards are $2.90 and $7.90. This is an almost 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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