Accenture Plc (NYSE: ACN) seems to be getting ready for a price bump in the short-term as per the latest charts. The company is an Ireland-based leading global IT services firm that provides consulting, strategy, and technology and operational services. These services run the gamut from aiding enterprises with digital transformation to procurement services to software system integration.
Bullish Move – Chart Indications
#1 Flag Pattern: As you can see from the daily 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 pink 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).
ACN – Daily Chart
#2 Bullish Stoch: The %K line of the stochastic is above the %D line as seen in the daily chart. This is a possible bullish sign.
#3 Bullish RSI: The RSI is currently moving higher from oversold levels and is nearing 50. This indicates bullishness.
#4 Above MA: The stock is currently trading above its longer-term moving average of 200-week SMA, indicating that the bulls are still in control.
#5 Unbroken Uptrend: The weekly chart shows that the stock’s uptrend is unbroken, as it has been forming higher highs and higher lows. The uptrend line is marked in purple color. This indicates bullishness.
ACN – Weekly Chart
#6 Price Above MAs: The stock is trading above its 50-week as well as 200-week SMA. This indicates that the bulls are firmly in control.
#7 Bullish ADX and DI: The ADX indicator shows bullishness, as the +DI line and the ADX line are above the -DI line/
#8 Bullish RSI: In the weekly chart, the RSI is currently above 50 and moving higher, signifying that an upmove may be imminent.
#9 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ACN is above the price of $386.20. This is marked as a green color dotted line in the daily chart.
TP: Our target prices are $410 and $430 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $371. Note that the stop loss is on a closing basis.
Our target potential upside is 6% to 11% in the next 3-6 months.
For a risk of $15.20, our first target reward is $23.80 and the second target reward is $43.80. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the flag pattern with 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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