Hanesbrands Inc. (NYSE: HBI) seems to be getting ready for a price bump as per the latest charts. Hanesbrands Inc. is a consumer goods company, designs, manufactures, sources, and sells a range of basic apparel for men, women, and children.
The company provides its products primarily under the Hanes, Champion, Maidenform, JMS/Just My Size, Bali, Polo Ralph Lauren, Playtex, DKNY, Alternative, Gear for Sports, Comfortwash, Hanes Beefy-T, Bonds, DIM, Sheridan, Bras N Things, Lovable, Wonderbra, Berlei, Abanderado, Shock Absorber, Zorba, Explorer, Sol y Oro, Maidenform, Rinbros, and Bellinda brand names.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart, the stock has been forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock currently looks poised for a breakout from the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
HBI – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than the (-DI) line and the ADX line is starting to move higher from below (-DI) and (+DI) lines.
#3 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.
#4 Bullish Stoch: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart, indicating possible bullishness.
#5 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 50% Fibonacci support level before moving higher, as seen in the weekly chart. This indicates bullishness.
HBI – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well, and is also moving higher from oversold levels. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for HBI is above the price of $16.10.
TP: Our target prices are $18.50 and $21 in the next 4-6 months.
SL: To limit risk, place a stop loss below $14.80. Note that the stop loss is on a closing basis.
Our target potential upside is 15% to 30% in the next 4-6 months.
For a risk of $1.30, our first target reward is $2.40 and the second target reward is $4.90. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge 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 energy sector.
Happy Trading!
— Tara
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