Kohl’s Corporation (NYSE: KSS) shows signs of an upcoming price surge according to its latest charts. Kohl’s Corporation offers branded apparel, footwear, accessories, beauty, and home products through its stores and website. The company provides its products primarily under the brand names of Apt. 9, Croft & Barrow, Jumping Beans, SO, and Sonoma Goods for Life, as well as Food Network, LC Lauren Conrad, and Simply Vera Vera Wang.
Bullish Indications
#1 Consolidation Area: As you can see from the daily chart, the stock was trading within a range for the past several months. This indicates consolidation. The consolidation area is marked as an orange color rectangle in the chart. Currently, the stock looks poised for a breakout from this consolidation area. A breakout from a consolidation area generally indicates bullishness.
KSS – Daily Chart
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day moving averages, indicating a bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color). When this happens, a potential buy signal is generated.
#4 Bullish ADX and DI: The ADX indicator shows bullishness as (+DI) is greater than (-DI), and the ADX line is rising from below both (+DI) and (-DI). This points to a possible upmove in the near-term.
#5 Bullish Stochastic: As you can see from the daily chart, the %K line (blue color) is currently above the %D line (orange color), indicating a possible bullish bias.
#6 IH&S Pattern in Weekly chart: The weekly chart shows that the stock has been forming an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in pink color. An IH&S pattern is a strong bullish pattern and the breakout from it indicates that the stock may move higher in the short term.
KSS – Weekly Chart
#7 Strong Stochastic: The %K line of stochastic is above the %D line in the weekly chart as well, indicating bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for KSS above yesterday’s high, at around $64.50.
TP: Our first target price is $70 and the second target price is $75 in the next 3-6 months based on the IH&S pattern.
SL: To limit risk, place a stop loss below $61.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 9% to 16% in the next 3-6 months.
For a risk of $3.20, our target rewards are $5.50 and $10.50. This is a 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 Inverted Head and Shoulders 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 the sector.
Happy Trading!
— Tara
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