Illinois-based company and provider of technology products and services for business, government and education, CDW common stock (NASDAQ: CDW) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: CDW’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 – CDW
#2 Double Bottom Breakout: The stock had formed a double bottom pattern, which is a bullish reversal pattern. This is marked in orange color in the daily chart. It has currently broken out of this double bottom pattern, indicating that the stock could possibly move upwards.
[hana-code-insert name=’adsense-article’ /]#3 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.#4 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.
#5 Double Bottom Pattern Breakout: As seen from the weekly chart, the stock has broken out of a double bottom pattern, indicating a possible bullish move in the short-term.
Weekly Chart – CDW
#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 is currently above the %D (Orange) line. This is a possible bullish indication.
Note: The stock may correct slightly before resuming its upmove due to the following reasons
- RSI in the daily and weekly chart is currently near overbought levels and moving down.
- CCI is moving down from +100 in the daily chart
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 $75.50.
TP: Our target prices are $85 and $95 based on the breakout from Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $70.90. Note that this stop loss is on a closing basis.
Our target potential upside is 13% to 26% in the next 3-5 months. For a risk of $4.60, the target rewards are $9.50 and $19.50. 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 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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