The financial services company that operates as the bank holding company for Guaranty Bank and Trust Company, Guaranty Bancorp (NASDAQ: GBNK) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: GBNK’s daily chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The breakout level of the ascending triangle pattern generally acts as a good support level.
Daily Chart – GBNK
#2 Trading Above MA: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#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 as a bullish bias.
#4 Stochastic %K above %D: The %K (blue) line of stochastic has crossed over the %D (Orange) line.
This cross called a signal line cross is usually an indication of a future upmove.
#5 Pennant Pattern Breakout: As seen from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range.
This is a classic pennant pattern and is marked in the chart in pink color. A pennant is a continuation pattern. Whenever a stock breaks out of the pennant pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the pennant pattern. This is a possible sign of an upcoming bullish move.
Weekly Chart – GBNK
#6 MACD above Signal Line: In the weekly chart, the MACD line has crossed above the MACD signal line which is a bullish signal. The stock is also trading above both 50-week and 200-week SMA, indicating that the bulls are still in control.
#7 Bullish Stochastic: The %K (blue) line of stochastic has crossed over the %D (Orange) line. This cross is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level is if the stock corrects back to the breakout level of ascending triangle pattern at around $29 to $29.80.
Note: For those looking for a speedier entry, you can purchase half the intended quantity of shares at the current price of $30.10.
TP: Our target prices are $35 and $45 based on the breakout from Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $27.50. Note that this stop loss is on a closing basis.
Our target potential upside is 16% to 55% in the next 3-6 months.
- Entry at $29.00: For a risk of $1.50, the target rewards are $6.00 and $16.00. This is a nearly 1:4 and 1:11 risk-reward trade.
- Entry at $29.80: For a risk of $2.30, the target rewards are $5.20 and $15.20. This is a nearly 1:2 and 1:7 risk-reward trade.
- Entry at $30.10: For a risk of $2.60, the target rewards are $4.90 and $14.90. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers nearly 2X to 11X 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 breakout level. 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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