Dell Technologies Inc. (NYSE: DELL) seems to be gearing up for a surge as per its latest charts. Dell Technologies Inc. is an American multinational technology company headquartered in Round Rock, Texas. It was formed as a result of the September 2016 merger of Dell and EMC Corporation.
The stock was a part of our watchlist for last week.
#1 Ascending triangle pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from an ascending triangle pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
#2 Trading above MAs: The price is currently above both the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA. This implies a possible bullish bias for the stock.
#3 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.
#4 Bullish ADX and DI: The daily chart shows that the +DI line and ADX lines are above the -DI line. The ADX line is also currently moving higher from below the -DI and +DI lines. This is a possible bullish sign.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Flag Pattern Breakout: The weekly chart shows that the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in pink color. Currently, the stock has broken out of the flag. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). The stock is also trading above its 50-week SMA. All these are possible bullish indications.
#7 Bullish Stoch: In the weekly chart, the %K line of the stochastic is above the %D line, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for DELL is above the price of $106.10.
TP: Our target prices are $118 and $125 in the next 3-6 months.
SL: To limit risk, place a stop loss at $98.90. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 11% to 18% in the next 3-6 months.
For a risk of $7.20, the target rewards are $11.90 and $18.90. This is a nearly 1:2 and 1:3 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 ascending triangle 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 its sector.
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