Revlon Inc. (NYSE: REV) shows signs of an upcoming price surge according to its latest charts. The company develops, manufactures, markets, distributes, and sells beauty and personal care products worldwide. The company’s Relvon segment offers color cosmetics and beauty tools under the Revlon brand; and hair color under the Revlon ColorSilk and Revlon Professional brands.
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock was forming a symmetrical triangle pattern. This pattern is shown as purple color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
#2 Above MAs: The stock is currently trading above its 50-day and 200-day SMA and has moved higher with high volume. This indicates an overall bullishness of the stock.
#3 Bullish Stoch: The %K line of the stochastic is above the %D line, which is a possible bullish indication.
#4 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line. All these indicate possible bullishness.
#5 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). This indicates a possible bullish bias.
#6 Consolidation Area: The weekly chart shows that the stock is currently trading within a consolidation area, which is marked as a pink color rectangle. Once the stock breaks out of this consolidation area, it would surge higher. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
#7 Bullish Stoch: The weekly chart shows that the %K line of the stochastic is above the %D line. It is also moving higher from oversold levels. All these are possible bullish indications.
#8 Bullish RSI: The weekly chart shows that the RSI is above 50 and moving higher. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for REV is if it closes above the price of around $12.40.
TP: Our target prices are $16.00 and $18.00 in the next 3-6 months.
SL: To limit risk, place a stop loss at $10.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 29% to 45% in the next 3-6 months.
For a risk of $2.10, our target rewards are $3.60 and $5.60. This is 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 symmetrical triangle 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.
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