Schlumberger NV (NYSE: SLB) seems to be gearing up for a surge as per its latest charts. Schlumberger Limited supplies technology for reservoir characterization, drilling, production, and processing to the oil and gas industry worldwide. It operates in four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems.
The stock was also a part of our recent watchlist.
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern which is a possible bullish sign. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as purple color lines.
#2 Trading above MAs: The price is currently above its short-term moving average of 50-day SMA as well as the longer-time moving average of 200-day SMA. This implies a possible bullish bias for the stock.
#3 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#4 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#5 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX line are also currently above the –DI line. This indicates possible bullishness.
#6 Uptrend Channel: The weekly chart shows that the stock is currently trading within an uptrend channel. This channel is marked in pink color lines. the stock currently looks poised for a breakout from the trend channel. It is also trading above its 50-week and 200-week SMA. All these are possible bullish signs.
#7 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating possible bullishness.
#8 Bullish MACD: In the weekly chart as well, the MACD line (blue color) is currently above the MACD signal line (orange color), which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for SLB is above the price of around $40.70. Alternatively, you can purchase the shares of SLB if it corrects to the price of around $35.00.
TP: Our target prices are $45 and $53 in the next 3-6 months.
SL: To limit risk, place a stop loss at $38.00 (for entry near $40.70) and $30.40 (for entry near $35.00). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 11% to 43% in the next 3-6 months.
- Entry near $35.00: For a risk of $4.60, the target rewards are $10.00 and $15.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $40.70: For a risk of $2.70, the target rewards are $4.30 and $9.30. 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 breakout level of the symmetrical triangle pattern. 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 its sector.
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