Cboe Global Markets Inc. (BATS: CBOE) seems to be poised for a price surge as per its latest charts. The company owns the Chicago Board Options Exchange and the stock exchange operator BATS Global Markets.
Bullish Indications
#1 Downtrend Channel: As you can see from the daily chart, the stock has been trading within a downtrend channel for the past few months. This is marked in the daily chart in purple color. Currently, the stock is moving higher from the lower rail of the downtrend channel with high volume. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
CBOE – Daily Chart
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA, indicating that the bulls are gaining control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below –DI and +DI lines. This indicates possible bullishness.
#5 Bullish RSI: The RSI is currently above 50 and moving higher, indicating bullishness.
#6 Flag Pattern: The weekly chart shows that the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked on the chart in orange color. Currently, the stock looks poised for a breakout from the flag pattern. 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). The stock is also trading above its 200-week SMA. All these are possible bullish indications.
CBOE – 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.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CBOE above the price of around $115.30.
TP: Our target prices are $120 and $125 in the next 3-6 months.
SL: To limit risk, place stop-loss at $112.80. Note that the stop-loss is on a closing basis.
Our target potential upside is 4% to 8% in the next 3 to 6 months.
For a risk of $2.50, our target rewards are $4.70 and $9.70. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the trend channel with a 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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