The American parent company of Avis Car Rental, Budget Car Rental, Budget Truck Rental, Payless Car Rental, Apex Car Rentals, Maggiore Group, and Zipcar, Avis Budget Group Inc. (NASDAQ: CAR) seems to be getting ready for a price surge according to its latest charts.
Bullish Indications
#1 Ascending triangle pattern support: CAR’s daily chart shows that the stock has currently taken support at the bottom of the Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked in the chart in blue lines. The stock has historically taken support near the bottom of ascending triangle pattern before moving higher again.
Daily Chart – CAR
#2 Double Bottom Pattern: The daily chart shows that the stock is currently forming a double bottom pattern. This is marked in orange color. A double bottom pattern is a strong bullish pattern and indicates a possible upmove in the short term.
[hana-code-insert name=’adsense-article’ /]#3 RSI Moving Up: In the daily chart, the RSI was near oversold levels and is currently moving up.
This implies that a possible reversal is around the corner.
#4 Supports Nearby: The stock has good support levels nearby.
The stock is currently trading above the gap support level (marked as a purple dotted line) as well as near the 200-day MA.
These act as good support levels.
#5 Bullish Harami Pattern: A Bullish Harami Pattern has currently formed near these significant support levels. This bullish pattern is marked as pink ellipse and points to a possible price reversal.
#6 Downtrend Broken: As you can see from the weekly chart of CAR, the stock had recently broken out of a downtrend. The downtrend line has been marked by a blue line. After the breakout, the downtrend line was tested again before the stock moved back up. This shows that the downtrend is now possibly over and the trend has reversed. The stock is also trading above both 50-week and 200-week SMA, implying that the bulls are now in control.
Weekly Chart – CAR
#7 RSI Moving Up: The weekly chart shows that RSI is moving up from near oversold levels. This is a possible bullish indication.
#8 Chaikin Oscillator Upmove: The Chaikin oscillator is currently moving up towards the zero line. Once it crosses the zero line, the price may start to move upwards.
#9 Double Bottom Support: The stock had recently broken out of a double bottom pattern and has currently taken support near its breakout level (marked as orange dotted lines). This seems like a good support area.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the stock now at the current price of $43.03.
TP: Our target prices are based on the ascending triangle pattern breakout. The first TP is $50 and the second TP is $65.
SL: To limit risk, place a stop loss at $39.40. Note that this stop loss is on a closing basis.
The target potential upside for this trade is nearly 16% to 51% in the next 3-6 months. For a risk of $3.63, the target rewards are $6.97 and $21.97. This is a nearly 1:2 and 1:6 risk-reward trade, which means that this trade offers nearly 2X to 6X 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 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 its sector.
Happy Trading!
Tara
[hana-code-insert name=’investorplace-article2′ /]