The California-based developer of Global Positioning System receivers, laser rangefinders, unmanned aerial vehicles, inertial navigation systems and software processing tools, Trimble Inc. (NASDAQ: TRMB) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Breakout: As you can see from the daily chart of TRMB, the stock had been forming a falling wedge pattern during the past few weeks. This is marked as purple color lines. The stock has currently broken out of the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – TRMB
#2 Double Bottom Pattern: From the daily chart of TRMB, we can see that the stock has currently formed a Double Bottom pattern. This is marked in the chart 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 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 potential buy signal.#4 RSI Strong: Relative strength index (RSI) is currently above 50 after moving up from oversold levels.
This indicates the strength of the current upmove.
#5 Bullish Stochastic: Currently, the %K line of the stochastic is above the %D line, indicating bullishness.
#6 Flag 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 flag pattern and is marked in the chart in purple color. A flag is a continuation pattern. Whenever a stock breaks out of this pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern. This is a possible sign of an upcoming bullish move.
Weekly Chart – TRMB
#7 Oversold RSI: In the weekly chart, the RSI is currently moving up after reaching oversold levels, indicating strength.
#8: Bullish CCI: In the weekly chart, CCI is moving up from below -100. This is a bullish sign as well.
#9 Rising Stochastic: The %K line has crossed above the %D line. The stochastic is also moving up from below 20. All this indicates possible bullishness.
#10 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. TRMB had taken support at 61.8% Fibonacci support level as seen in the weekly chart. This seems like a good support area.
#11 Bullish Reversal: After forming Doji candlestick, the stock has formed a bullish reversal candle during the past week. This seems like the indication of a possible reversal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of TRMB at the current price of $35.44.
TP: Our target prices are $45 and $55 in the next 3-6 months.
SL: To limit risk, place a stop loss near $31.50. Note that the stop loss is on a closing basis.
Our target potential upside is 27% to 55% in the next 3-6 months. For a risk of $3.94, our first target reward is $9.56 and second target reward is $19.56. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with 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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