The American bus manufacturer headquartered in Fort Valley, Georgia, best known for its production of school buses, Blue Bird Corp (NASDAQ: BLBD) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Near support area: The daily chart shows that the stock is currently near a support area. This is marked as a purple dotted line. This seems like a good area for the stock to bounce higher.
Daily Chart – BLBD
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines.
The +DI line is also currently above –DI line.
All these indicate possible bullishness.
#4 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color).
This is a possible bullish indication.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart, indicating possible bullishness.
#6 Ascending triangle pattern Breakout: BLBD’s weekly chart shows that the stock has been recently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level. Currently, the stock has broken out of the ascending triangle pattern, which is usually a bullish sign.
Weekly Chart – BLBD
#7 MACD above Signal Line: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal.
#8 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly chart as well, indicating possible bullishness.
#9 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart as well, because (+DI) is greater than (-DI), and ADX has started to move up from below (-DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal entry level for BLBD is above the $21.65
TP: Our target prices are $25 and $30 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $19.35. Note that this stop loss is on a closing basis.
Our target potential upside is 15% to 39% in the next 4-6 months.
For a risk of $2.30, the target rewards are $3.35 and $8.35. 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 with high volume from the ascending 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 its sector.
Happy Trading!
Tara
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