The company that develops, manufactures, and markets engineered specialty chemicals worldwide and operate through three segments: Lithium, Bromine Specialties, and Catalysts, Albemarle Corporation (NYSE: ALB) shows signs of an upcoming price surge based on its latest charts.
Bullish Indications
#1 Consolidation Area Breakout: The daily chart shows that the stock was trading within a consolidation area for the past several days. This is marked in the chart as a purple color rectangle. Currently, the stock looks ready for a breakout from this consolidation area. Once a stock breaks out from a consolidation area, it usually moves higher.
Daily Chart – ALB
#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 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 possible 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. It is marked as pink color lines in the daily chart. The stock has currently broken out of this flag pattern. This is a possible bullish sign. The stock is also trading above its 50-week as well as 200-week SMA, which indicates that the bulls are in control.
Weekly Chart – ALB
#7 MACD above signal line: In the weekly chart as well, the MACD line is above the signal line, indicating bullishness.
#8 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart as well, as the (+DI) and the ADX lines are above the (-DI) line.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of ALB above yesterday’s close. This translates to a price of around $192.40.
TP: Our target prices are $200 and $220.
SL: To limit risk, place a stop loss below $187.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 4% to 14% in the next 4-6 months.
For a risk of $5.00, our target rewards are $7.60 and $27.60. This is a nearly 1:2 and 1:6 Risk-Reward trade.
In other words, this trade offers nearly 2x to 6x 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 consolidation area. 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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