The company engaged in the research and development, manufacture, sale, and distribution of critical technical equipment, components, software, and services for manufacturing, repair, and servicing in the mobility infrastructure industry worldwide, Vontier Corp (NYSE: VNT) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern with high volume. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as purple color lines. Once a stock breaks out from a symmetrical triangle pattern, it usually moves higher.
Daily Chart – VNT
#2 Trading above MA: The price is currently above its short-term moving average of 50-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 is also currently above the –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line (blue color) is currently above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#6 Unbroken Uptrend: The weekly chart shows that the stock’s uptrend is currently unbroken, as it has been forming higher highs and higher lows. The stock has currently moved higher after taking support at the trendline. This is a possible bullish sign.
Weekly Chart – VNT
#7 Bullish RSI: The weekly chart shows that the Relative Strength Index is currently above 50 and moving higher. This is a possible bullish sign.
#8 Bullish ADX and DI: In the weekly chart as well, the +DI line is above the -DI line, which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for VNT is above yesterday’s high. This translates to a price of around $36.30.
TP: Our target prices are $41 and $46 in the next 2-4 months.
SL: To limit risk, place a stop loss at $33.20. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 13% to 27% in the next 3-6 months.
For a risk of $3.10, the target rewards are $4.70 and $9.70. 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 symmetrical 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