Walgreens Boots Alliance, Inc. (WBA) seems to be poised for a price surge as per its latest charts. The company operates as a pharmacy-led health and beauty retail company. It operates through two segments, the United States and International. The company sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores.
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock had been forming a falling wedge pattern for the past few days. These are marked as purple color lines. The stock has currently broken out of the falling wedge pattern with a high volume and looks poised for an upmove. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
#2 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.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart and is also moving higher from oversold levels, indicating possible bullishness.
#4 Positive OBV: The daily chart shows that the OBV indicator is currently rising. OBV rises when volume on up days outpaces volume on down days. A rising OBV typically reflects positive volume pressure that can lead to higher prices.
#5 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a long-term strong support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher.
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart and is also moving higher from oversold levels. This is a possible bullish indication.
#7 Oversold RSI: In the weekly chart, the RSI is currently near oversold levels and starting to move higher. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of WBA above the price of around $22.50.
TP: Our target prices are $23.60 and $25.00 in the next 3-6 months.
SL: To limit risk, place stop-loss at $21.80. Note that the stop-loss is on a closing basis.
Our target potential upside is 5% to 11% in the next 3 to 6 months.
For a risk of $0.70, our target rewards are $1.00 and $2.50. 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 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.
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