HP Inc. (NYSE: HPQ) shows signs of an upcoming price surge according to its latest charts. HP Inc. provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally. The company operates through three segments: Personal Systems, Printing, and Corporate Investments.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart shows that the stock was trading within a falling wedge pattern during the past several months. This is marked in the daily chart in pink color. Currently, the stock has broken out of this falling wedge pattern. A breakout from a bullish pattern like Falling Wedge Pattern shows that the stock has gained momentum and has the potential to move further up.
HPQ – Daily Chart
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day moving average, indicating a bullish bias for the stock in the short term.
#3 Bullish Stochastic: The %K line is above the %D line of the stochastic, indicating bullishness.
#4 Bullish ADX and DI: The ADX indicator shows bullishness, as the (+DI) line and ADX line are currently above the (-DI) line, and the ADX line has currently moved higher from below the (+DI) and (-DI) lines.
#5 Flag Pattern Breakout: As seen from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range. This is a classic flag pattern and is marked in the chart in purple color. A flag is a continuation pattern. Whenever a stock breaks out of this pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern. This is a possible sign of an upcoming bullish move. The stock is also trading above its 50-week and 200-week SMA, indicating possible bullishness.
HPQ – Weekly Chart
#6 MACD above Signal Line: In the weekly chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#7 Bullish Stoch: In the weekly chart as well, the %K line of the stochastic is above the %D line, indicating possible bullishness.
Recommended Trade (Based on the Charts)
Buy Price: If you want to get in on this trade, the ideal buy level for HPQ is above the price of $32.50
TP: Our target prices are $40 and $45 in the next 3 to 5 months based on the falling wedge pattern breakout.
SL: To limit risk, place a stop loss below $28.00. Note that this stop loss is on a closing basis.
Our target potential upside is almost 23% to 38% in the next 3-5 months.
For a risk of $4.50, our first target reward is $7.50 and the second target reward is $12.50. 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 falling wedge pattern 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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