Halliburton Company (HAL) seems to be poised for a price surge as per its latest charts. The company provides products and services to the energy industry worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation.
The stock was also a part of our recent watchlist for breakout stocks.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock has now broken out of the falling wedge pattern and is currently moving higher. A falling wedge is a bullish pattern and a breakout from it implies that the stock may surge higher in the short term.
HAL – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are currently in 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 the –DI and +DI lines. This indicates possible bullishness.
#5 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.
#6 Flag Pattern Breakout: As you can see from the weekly chart, the stock has currently broken out of a flag pattern, which is marked as pink color lines. The stock is also trading above its 50-week and 200-week SMA. All these are possible bullish signs.
HAL – Weekly Chart
#7 Bullish MACD: In the weekly chart as well, the MACD (blue) line has currently crossed above the MACD signal (Orange) line and is also moving higher from oversold levels. This is a possible bullish indication.
#8 Bullish RSI: The weekly chart shows that the RSI is above 50 and moving higher. This is a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of HAL above the price of around $35.
TP: Our target prices are $41 and $44 in the next 3-6 months.
SL: To limit risk, place stop-loss below $32.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 17% to 26% in the next 3 to 6 months.
For a risk of $3.00, our target rewards are $6.00 and $9.00. 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 from the breakout level of the falling wedge pattern 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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