FirstEnergy Corp. (NYSE: FE) shows signs of an upcoming price surge according to its latest charts. The company, through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, natural gas, wind, and solar power generating facilities.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock had recently formed a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out and is formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Currently, the stock has broken out of the symmetrical triangle pattern, indicating bullishness.
FE – Daily Chart
#2 Above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are currently in control.
#3 Bullish RSI: The RSI is currently above 50 and moving higher. This indicates that the stock may move higher.
#4 %K above %D in Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line. This indicates possible bullishness.
#5 Bullish ADX and DI: The daily chart shows that the ADX, as well as +DI lines, are above the -DI lines. This is a possible bullish sign.
#6 Flag Pattern Breakout: As you can see from the weekly 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 on 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). Currently, the stock has broken out of the flag pattern, which is a bullish sign. The stock is also trading above its 50-week as well as 200-week SMA, indicating that the bulls are firmly in control.
FE – Weekly Chart
#7 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart, indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for FE is above the price of $41.40.
TP: Our target prices are $45.00 and $48.00 in the next 4-6 months.
SL: To limit risk, place a stop loss at $39.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 9% to 16% in the next 4-6 months.
For a risk of $2.10, our target rewards are $3.60 and $6.60. This is an almost 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 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 the sector.
Happy Trading!
Tara