Graphic Packaging Holding Company (NYSE: GPK) shows signs of an upcoming price surge according to its latest charts.
GPK is a coated and laminated paper manufacturing company that provides paper-based packaging solutions to food, beverage, foodservice, and other consumer products companies.
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 orange 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 – GPK
#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 MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA. This usually implies a 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 started to move up from below (-DI) and (+DI) lines.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Above Support Area: As seen in the weekly chart, the stock is currently trading above a strong support area, which is marked as a pink color dotted line. The stock is also above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – GPK
#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 GPK above the price of around $18.90.
TP: Our target prices are $22 and $25 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $17.00. Note that this stop loss is on a closing basis.
Our target potential upside is almost 16% to 32% in the next 4-6 months.
For a risk of $1.90, our first target reward is $3.10 and the second target reward is $6.10. This is a nearly 1:2 and 1:3 risk-reward trade.
Overall, 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 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.
Analyst Ratings and Price Targets
GPK has an average analyst consensus of Moderate Buy and an average price target of $21.00. This represents 12% upside from its last closing price of $18.75. This data is based on seven Wall Street analysts offering 12-month price targets for Graphic Packaging in the last 3 months.
Happy Trading!
— Tara
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