The American money transfer company based in the United States with headquarters in Dallas, Texas, Moneygram International Inc. (NASDAQ: MGI) seems to be gearing up for a surge as per its latest charts. The stock was a part of our watchlist for this week.
Bullish Indications
#1 Ascending Triangle Pattern: The stock’s daily chart shows that it has been forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. Currently, the stock looks poised for a breakout.
Daily Chart – MGI
#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.
#3 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart. This typically indicates a bullish setup.
#4 Bullish ADX and DI: The ADX line has currently started to move up from below –DI and +DI lines in the daily chart. The +DI line is also currently above the –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of the prevailing downtrend and started a new uptrend. The downtrend line is shown in blue color. The stock is also above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – MGI
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates bullishness.
#8 Bullish MACD: In the weekly chart as well, the MACD line is above the MACD signal line, which 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 the shares of MGI if it trades above the price of around $12.00. This is marked as a green color dotted line.
TP: Our target prices are $15 and $19 in the next 3-6 months.
SL: To limit risk, place a stop loss near $10.30. Note that this stop loss is on a closing basis.
Our target potential upside is 25% to 58% in the next 4-6 months.
For a risk of $1.70, the target rewards are $3.00 and $7.00. 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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