The company that develops, publishes, and markets interactive entertainment solutions for consumers worldwide and offers its products under the Rockstar Games and 2K labels, as well as under Private Division and Social Point labels, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) seems poised for a price surge according to its latest charts.
Bullish Indications
#1 Downtrend Broken: The daily chart shows that the stock has broken out of the prevailing downtrend and is now slowly moving higher. The downtrend line is marked in purple color. This is a possible bullish sign.
Daily Chart – TTWO
#2 Above MAs: The stock price is currently above its short-term moving average of 50-day as well as the long-term moving average of 200-day SMA. This indicates that the bulls are currently in control.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart, indicating possible bullishness.
#5 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines in the daily chart. The ADX line and the +DI line is also currently above the –DI line. This indicates possible bullishness.
#6 Double Bottom Pattern: The weekly chart shows that the stock is currently forming a double bottom pattern. This is marked in pink color. A double bottom pattern is a strong bullish pattern and a breakout from it would indicate that the stock could surge higher.
Weekly Chart – TTWO
#7 Strong RSI: Relative strength index (RSI) is currently above 50 and moving higher. This indicates the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for TTWO is above the breakout level of the double bottom pattern, at around $189.00. This is marked in the chart as a pink color dotted line.
However, you can purchase half the intended quantity of shares of TTWO above yesterday’s high, at around $180.00.
TP: Our target prices are $189.00 and $200.00 in the next 4-6 months.
SL: To limit risk, place a stop loss at $174.00 (for entry near $180.00) and $183.00 (for entry near $189.00). Note that this stop loss is on a closing basis.
- Entry near $180.00: For a risk of $6.00, our target rewards are $9.00 and $20.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $189.00: For a risk of $6.00, our target reward is $11.00. This is a nearly 1:2 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the double bottom 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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