Guess?, Inc. (NYSE: GES) seems to be poised for a price surge as per its latest charts. Guess is an American clothing brand and retailer. In addition to clothing for both men and women, Guess markets other fashion accessories such as watches, jewelry, perfumes, bags, and shoes.
Bullish Indications
#1 Falling Wedge Breakout: As you can see from the daily chart, the stock was trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in pink color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
GES – Daily Chart
#2 MACD Above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
#3 Above MA: In the daily chart, the stock is currently trading above its 50-day SMA. This implies that the bulls are presently gaining control.
#4 Bullish Stoch: %K (blue) line of stochastic is currently above the %D (Orange) line, which is a possible bullish sign.
#5 Bullish ADX and DI: The ADX line is starting to move up from below –DI and +DI lines. The +DI line and the ADX line are also currently above –DI line. This indicates possible bullishness.
#6 Flag Pattern Breakout: As you can see from the weekly chart, the stock was in a strong 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 purple color. 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). Currently, the stock has broken out of the flag pattern which is a possible bullish sign. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are in control.
GES – Weekly Chart
#7 Other bullish indications: The %K line of the stochastic is above the %D line and the stochastic is also moving higher from oversold levels. The MACD line is above the MACD signal line. The ADX indicator also shows bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of GES above the price of $25.20.
TP: Our target prices are $30 and $38 in the next 3-6 months.
SL: To limit risk, place stop-loss at $22.00. Note that the stop loss is on a closing basis.
Our target potential upside is 19% to 51% in the next 3-6 months.
For a risk of $3.20, our target rewards are $4.80 and $12.80. This is a 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 from the falling wedge pattern with a high volume. 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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