One of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets, International Seaways Inc. (NYSE: INSW) shows signs of an upcoming price surge based on its latest charts.
Bullish Indications
#1 IH&S Pattern in Daily chart: As you can see from the daily chart of INSW, over the past several months, the stock has formed an Inverted Head and Shoulders (IH&S) pattern. This is marked in the daily chart below. An IH&S pattern is a strong bullish pattern. A breakout from the IH&S pattern indicates that the stock may move higher in the short term.
Daily Chart – INSW
#2 MACD Cross: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Resistance-Turned-Support: The daily chart shows that the price has crossed a long-term resistance-turned-support level.
This indicates that the price may move higher.
The stock’s current price is also above 50-day SMA and 200-day SMA, indicating bullishness.
#4 Strong RSI: In the daily chart, the RSI is currently above 50 and moving upwards, indicating strength.
#5 Flag Pattern Breakout: As seen from the weekly chart of INSW, the stock was in an uptrend until July 2017. After that, the stock was in a consolidation phase. This is a classic flag pattern, which is marked as orange lines in the daily chart. INSW has currently broken out of this flag pattern. Typically, after a breakout from the flag pattern, there would be a correction to the breakout level once again before continuing the upmove.
Weekly Chart – INSW
#6 Fibonacci Support: The stock had taken support at the 50% Fibonacci retracement level before bouncing back again. This is a good support level.
#7 MACD above signal line: In the weekly chart as well, the MACD line is above the signal line, indicating bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of INSW at the current price of $19.64 and the remaining half can be purchased if the stock corrects back to the breakout level of the IH&S pattern.
TP: Our target prices are $25 and $30.
SL: To limit risk, place a stop loss below the shoulder of the IH&S pattern. This translates to $16.80. Note that this stop loss is on a closing basis.
Our target potential upside is almost 27% to 53% in the next 4-6 months. For a risk of $2.84, our target rewards are $5.36 and $10.36. 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 breakout level of the Inverted Head and Shoulders 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 the sector.
Happy Trading!
Tara
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