CME Group Inc. (NASDAQ: CME) shows signs of an upcoming price surge according to its latest charts. CME Group Inc. is an American global markets company. It is the world’s largest financial derivatives exchange, and trades in asset classes that include agricultural products, currencies, energy, interest rates, metals, stock indexes, and cryptocurrencies futures.
Bullish Indications
#1 Flag Pattern Breakout: As seen from the daily chart, the stock was in a strong uptrend after which it started consolidating. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in orange color in the daily chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case. Currently, the stock has broken out of the flag pattern, which is a bullish sign.
CME – Daily Chart
#2 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.
#3 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), indicating a bullish bias.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line and the ADX line are greater than the (-DI) line, and ADX has started to move up from below both (+DI) and (-DI).
#5 IH&S Pattern Breakout: As you can see from the weekly chart, the stock has been 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 it indicates that the stock may move higher in the short term. Currently, the stock has broken out of the IH&S pattern, indicating bullishness. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are firmly in control.
CME – Weekly Chart
#6 MACD above Signal Line: In the weekly chart as well, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of CME above the price of around $232.60.
TP: Our target prices are $250 and $260.
SL: To limit risk, place a stop loss at $222. Note that this stop loss is on a closing basis.
Our target potential upside is almost 7% to 12% in the next 3-6 months.
For a risk of $10.60, our target rewards are $17.40 and $27.40. This is an almost 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 flag 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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