The American agricultural machinery manufacturer with its headquarters in Duluth, Georgia, AGCO Corporation (NYSE: AGCO) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock was trading within a falling wedge pattern during the past few days. This pattern is marked in the daily chart in pink color. The stock has currently broken out from the falling wedge pattern. Once the stock breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – AGCO
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#3 Price above MA: The price is currently above the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because ADX and (+DI) are above (-DI), and the ADX line has moved up from below (-DI) and (+DI) lines.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 61.8% Fibonacci support level of the upmove before moving higher, as seen in the weekly chart. The stock is also currently trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – AGCO
#7 Bullish Stoch: The %K line (blue color) is above the %D (orange color) of the stochastic in the weekly chart. It is also moving higher from oversold levels. This is a possible bullish sign.
#8 Bullish RSI: The RSI is currently above 50 and moving higher in the weekly chart. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of AGCO above the price of around $138.00.
Note: Alternatively, you can purchase the shares of AGCO if it corrects to the price of $126.00 and set a stop-loss below $120.00.
TP: Our target prices are $145 and $160 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $133.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 5% to 16% in the next 4-6 months.
For a risk of $4.60, our first target reward is $7.00 and the second target reward is $22.00. This is a nearly 1:2 and 1:5 risk-reward trade.
Overall, 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 falling wedge 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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