Zillow Group Inc. (NASDAQ: Z) seems to be getting ready for a price bump as per the latest charts. Zillow Group, Inc., a digital real estate company, operates real estate brands on mobile applications and Websites in the United States. The company operates through three segments: Homes; Internet, Media & Technology; and Mortgages.
[Editors Note: For a trade idea on Zillow Group (Z) that targets a 100% return, click here for an article on our sister site, Daily Trade Alert.]Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart, the stock was forming a falling wedge pattern for the past few months. These are marked as purple color lines. The stock currently looks poised for a breakout from the falling wedge pattern. A falling wedge is a bullish pattern and once a breakout from it happens, the stock may move higher in the short term.
Z – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than the (-DI) line and the ADX line has started to move higher from below (-DI) and (+DI) lines.
#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 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.
#5 Trading Above MA: The stock is currently trading above its 50-day moving average, indicating a bullish bias for the stock.
#6 Above Support Area: The weekly chart shows that the stock is trading above a support area, which is marked as a pink color dotted line. This is a possible bullish sign.
Z – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart and is also moving higher from oversold levels. This is a possible bullish indication.
#8 Bullish RSI: The RSI is moving higher from oversold levels, indicating bullishness.
#9 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well. This 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 price for Z is if the stock breaks out of the falling wedge pattern and closes above the price of $65.00.
TP: Our target prices are $73 and $78 in the next 2-6 months.
SL: To limit risk, place a stop loss below $60.50. Note that the stop loss is on a closing basis.
Our target potential upside is 12% to 20% in the next 2-6 months.
For a risk of $4.50, our first target reward is $8.00 and the second target reward is $13.00. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with high volume. 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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