Ralph Lauren Corp (NYSE: RL), the American fashion company producing products ranging from the mid-range to the luxury segments, shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock has been trading within a downtrend channel for the past few months. This channel is marked in the daily chart in purple color. Currently, the stock has broken out of this channel, indicating that it has the potential to surge ahead.
Daily Chart – RL
#2 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible 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 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.
#5 Bullish ADX: The daily chart shows that the ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX lines are also currently above –DI line. All these indicate possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The weekly chart shows that the stock is now moving up after taking support near the 50% Fibonacci retracement level of the upmove. The stock is also trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – RL
#7 Bullish RSI: The RSI is currently above 50 and moving higher, indicating possible bullishness.
#9 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart. It is also moving higher from oversold levels. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of RL if it opens and trades above yesterday’s high. This translates to a price above $120.00.
TP: Our target prices are $130 and $140 in the next 3-6 months.
SL: To limit risk, place a stop loss at $114.70. Note that this stop loss is on a closing basis.
Our target potential upside is almost 8% to 17% in the next 3-6 months.
For a risk of $5.30, our target rewards are $10.00 and $20.00. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x rewards when compared to risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel breakout level. 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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