Fossil Group Inc. (NASDAQ: FOSL) shows signs of an upcoming price surge according to its latest charts. Fossil Group, Inc., designs, develops, markets, and distributes consumer fashion accessories.
The stock was also a part of this week’s watchlist.
Bullish Indications
#1 Breakout From Consolidation Area: The daily chart shows that the stock has been trading within a consolidation area for the past several days. This is marked in the daily chart as a pink color rectangle. Currently, the stock has broken out from this consolidation area. Once a stock breaks out from a consolidation area, it usually moves higher.
FOSL – Daily Chart
#2 Above MA: The stock is currently trading above its 50-day SMA. This indicates an overall bullishness of the stock.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because the +DI line is above the -DI line and the ADX line is currently moving higher from the +DI and -DI lines.
#4 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
#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 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The weekly chart shows that the stock had taken support at the 23.6% Fibonacci support level of the upmove before starting to move higher. This is a possible bullish sign.
FOSL – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, and is also moving higher from oversold levels. All this indicates possible bullishness.
#8 Bullish RSI: The RSI is above 50 and moving higher, indicating bullishness.
#9 Bullish ADX and DI: In the weekly chart as well, the ADX indicator shows bullishness because the +DI line and the ADX line are above the -DI line and the ADX line is currently moving higher from the +DI and -DI lines.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for FOSL is above the price of around $12.50. However, you can purchase half the intended quantity of shares of FOSL above yesterday’s close, at around $11.80.
TP: Our target prices are $14 and $15 in the next 1-5 months.
SL: To limit risk, place a stop loss at $11.60 (for entry near $12.50) and $10.70 (for entry near $11.80). Note that this stop loss is on a closing basis.
Our target potential upside is almost 12% to 27% in the next 1-5 months.
- Entry near $11.80: For a risk of $1.10, our target rewards are $2.20 and $3.20. This is almost 1:2 and 1:3 risk-reward trade.
- Entry near $12.50: For a risk of $0.90, our target rewards are $1.50 and $2.50. This is almost 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 consolidation area. 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 the sector.
Happy Trading!
— Tara
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