CSX Corporation (NASDAQ: CSX) seems to be poised for a price surge as per its latest charts. CSX Corporation is an American holding company focused on rail transportation and real estate in North America, among other industries.
Bullish Indications
#1 Breakout from Consolidation area: The daily chart shows that the stock was consolidating within a price range for the past few days. This area is marked as a pink color rectangle. The stock has now broken out from this consolidation area with high volume and is currently trading above it. The breakout level of this consolidation area typically acts as a good support level.
CSX – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX: 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 is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Uptrend Channel: As you can see from the weekly chart, the stock has been trading within an uptrend channel during the past several months. This is marked in the chart in purple color lines. Currently, the stock is moving higher after taking support at the lower rail of the trend channel. Once a stock breaks out from a channel, it has the potential to move further up. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
CSX – Weekly Chart
#7 Bullish RSI: Relative strength index (RSI) is currently above 50 after moving higher from oversold levels. This indicates bullishness.
#8 Bullish Stoch: In the weekly chart, the %K line of the stochastic has crossed above the %D line, and is also moving higher from oversold levels. All this indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CSX above the price of around $38.
TP: Our target prices are $43 and $47 in the next 3-6 months.
SL: To limit risk, place stop-loss at $35. Note that the stop-loss is on a closing basis.
Our target potential upside is 13% to 21% in the next 3 to 6 months.
For a risk of $3.00, our target rewards are $5.00 and $8.00. 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 from the consolidation area with a 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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