The American global investment management corporation based in New York City and the world’s largest asset manager, with $7.4 trillion in assets under management as of end-Q4 2019, BlackRock, Inc. (NYSE: BLK) seems to be poised for a decline in its price in the near term as per its latest charts.
Bearish Indications
#1 %K below %D in Stochastic: The %K line is currently below the %D line in stochastic of the daily chart. It is also currently moving down from overbought levels. All these indicate possible bearishness.
Daily Chart – BLK
#2 Bearish ADX and DI: The ADX and DI indicate bearishness. This is because (+DI) < (-DI); ADX and (-DI) are above (+DI); and ADX is moving down from both (+DI) and (-DI). All these points to possible bearishness.
#3 Price below MAs: The price is currently below the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA.
This usually implies a possible bearish bias for the stock.
#4 Bearish RSI: The RSI is currently below 50 and moving down.
This is a possible bearish sign.
#5 Double Top Pattern: The weekly chart shows that the stock had recently formed a double top pattern.
It is a bearish pattern and is marked in orange color in the chart. Once the stock breaks down from this pattern, it may move lower.
Weekly Chart – BLK
#6 Bearish MACD: The MACD line (blue color) is currently below the MACD signal line (orange color) in the weekly chart as well, indicating bearishness.
#7 Bearish RSI: The weekly chart shows that the RSI is moving down and is currently below 50. This is a possible bearish sign.
#8 Bearish ADX and DI: The ADX and DI indicate bearishness in the weekly chart as well, as the (+DI) < (-DI); ADX and (-DI) are above (+DI); and ADX is starting to move down from both (+DI) and (-DI). All these are bearish indications.
#9 Below MAs: In the weekly chart as well, the stock is currently trading below its 50-week and 200-week SMA, which is a possible bearish sign.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can take short positions on BLK below the nearest support area, which translates to a price of $400.
TP: Our target prices are $380 and $360 in the next 3-6 months.
SL: To limit risk, place a stop loss at $411. Note that this stop loss is on a closing basis.
Our target potential downside is 5% to 10% in the next 3-6 months.
For a risk of $11.00, our target rewards are $20.00 and $40.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks upwards from the support area with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
Tara