The diversified natural resources company headquartered in Vancouver, British Columbia, that is engaged in mining and mineral development, including coal for the steelmaking industry, copper, zinc, and energy, Teck Resources Ltd Class B (NYSE: TECK) shows signs of an upcoming price surge based on its latest charts.
Bullish Indications
#1 IH&S Pattern Breakout: As you can see from the daily chart, over the past several days, the stock was forming an Inverted Head and Shoulders (IH&S) pattern. This is marked in the daily chart in purple color. Currently, the stock has broken out of this IH&S pattern. An IH&S pattern is a strong bullish pattern. A breakout from the IH&S pattern indicates that the stock may move higher in the short term.
Daily Chart – TECK
#2 MACD Cross: As you can see from the daily chart, the MACD line (blue color) has currently crossed above the MACD signal line (orange color), indicating a bullish bias.
#3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX has started to move up from below both (+DI) and (-DI).
#5 Bullish Stoch: %K (blue) line of stochastic is currently above the %D (Orange) line, indicating bullishness.
#6 Flag Pattern Breakout: As seen from the weekly chart, the stock was in an uptrend after which it was in a consolidation phase. This is a classic flag pattern, which is a bullish pattern. This has been marked as pink color lines in the daily chart. The stock has currently broken out of this flag pattern. The stock is also trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – TECK
#7 MACD above signal line: In the weekly chart as well, the MACD line is above the signal line, indicating bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of TECK above yesterday’s close. This translates to a price of around $24.20.
TP: Our target prices are $29 and $35.
SL: To limit risk, place a stop loss below $21.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 20% to 45% in the next 4-6 months.
For a risk of $2.80, our target rewards are $4.80 and $10.80. 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 breakout level of the Inverted Head and Shoulders 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 the sector.
Happy Trading!
— Tara
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