The Fortune 500 American multinational corporation and world leader in innovative workforce solutions, ManpowerGroup Inc. (NYSE: MAN) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, MAN has been trading within a falling wedge pattern during the past several months.
[hana-code-insert name=’adsense-article’ /]This is marked in purple color in the daily chart.Currently, the stock has broken out of the falling wedge pattern.
A Falling Wedge Pattern is a bullish pattern.
Once the stock breaks out from it, it has the potential to move further up.
#2 Double Bottom Support: From the daily chart, we can see that the stock had recently broken out of a double Bottom pattern.
This is marked in the daily chart in pink color.
Currently, the stock has taken support near the breakout level of the double bottom pattern. This seems like a good level for bounce-back.
Daily Chart – MAN
#3 Long-term support: There is a long-term support level of the stock nearby, which is marked in green dotted lines. The 50-day SMA also acts as a good support level for the stock.
#4 Bullish Stochastic: The %K line of the stochastic is also above the %D line. This is a bullish sign.
#5 Strong RSI Moving Up: In the daily chart, RSI is moving up from below oversold levels. Currently, it is above 50 and moving up, indicating strength.
#6 Fibonacci Level Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. MAN had taken support at the 38.2% Fibonacci support level of the upmove, as seen from the weekly chart. This seems like a good level to bounce back upwards.
Weekly Chart – MAN
#7 RSI Oversold and Moving up: The weekly chart shows that RSI is moving up after reaching oversold levels. This indicates the strength of the coming upmove.
#8 CCI moving up: The Commodity Channel Index (CCI) indicator is currently above -100 and moving up. Since the CCI is moving up from oversold levels, it usually indicates the beginning of the next upmove. This is also a possible bullish sign.
#9 MACD Above Signal Line: As you can see from the weekly chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of MAN at the current price of $90.65.
TP: Our target prices are $110 and $135 in the next 4-6 months.
SL: To limit risk, place stop-loss at $86.20. Note that stop loss is on a closing basis.
Our target potential upside is 21% to 49% in the next 4-6 months. For a risk of $4.45, our target rewards are $19.35 and $44.35. This is a nearly 1:4 and 1:10 risk-reward trade.
In other words, this trade offers nearly 4x to 10x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern support with a 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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