The insurance company that provides financial products and services in Peru, Intercorp Financial Services Inc. (NYSE: IFS) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been trading within a downtrend channel during the past few weeks. This is marked in the daily chart in purple color lines. Currently, the stock has broken out of the channel. A breakout from the channel typically causes the stock to move higher.
Daily Chart – IFS
#2 Trading above MAs: The price is currently above its short-term moving average of 50-day SMA as well as the longer-time moving average of 200-day SMA. This implies a possible bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX line is also currently above the –DI line. 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 Breakout From A Consolidation Area: The weekly chart shows that the stock was trading within a consolidation area for the past several weeks. This is marked in the chart as a pink color rectangle. Currently, the stock has broken out of this consolidation area with a high volume. Once a stock breaks out from a consolidation area, it usually moves higher.
Weekly Chart – IFS
#7 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#8 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level of IFS is above Friday’s close. This translates to a price of around $30.50.
TP: Our target prices are $35 and $40 in the next 2- 5 months.
SL: To limit risk, place a stop loss near $27.50. Note that this stop loss is on a closing basis.
Our target potential upside is 15% to 31% in the next 3-5 months.
For a risk of $3.00, the target rewards are $4.50 and $9.50. 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 with high volume from the channel breakout level. 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
This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.