Williams Companies Inc. (NYSE: WMB) seems to be gearing up for a surge as per its latest charts. The Williams Companies, Inc., is an American energy company based in Tulsa, Oklahoma. Its core business is natural gas processing and transportation, with additional petroleum and electricity generation assets.
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock was forming a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink color lines. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move. The stock has currently broken out of the symmetrical triangle pattern, indicating possible bullishness.
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
#3 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.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because the ADX line and the (+DI) line are greater than the (-DI) line and the ADX line is rising from below both (+DI) and (-DI) lines.
#6 IH&S Pattern: As you can see from the weekly chart, the stock is currently forming an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in purple color. An IH&S pattern is a strong bullish pattern and a breakout from this pattern indicates that the stock may move higher in the short term.
#7 Bullish MACD: In the weekly chart, the MACD line is above the MACD signal line, indicating possible bullishness.
#8 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart, which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for WMB is above the price of around $30.70. This is marked as a green color dotted line in the weekly chart.
TP: Our target prices are $38, and if it closes above that level, $47 in the next 3-6 months.
SL: To limit risk, place a stop loss at $26.30. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 24% to 53% in the next 3-6 months.
For a risk of $4.40, the target rewards are $7.30 and $16.30. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical 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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