The American multinational hospitality industry company that owns Chili’s and Maggiano’s Little Italy restaurant chains, Brinker International, Inc. (NYSE: EAT) show signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Uptrend Channel Support: The daily chart of EAT shows that the stock was trading within an uptrend channel for the past several months. This channel is marked on the daily chart in purple color. The stock had recently moved down from this uptrend channel. However, it has now moved back up within the channel and has taken support at the bottom of the channel. Once the stock breaks out from this uptrend channel, it has the potential to move further up.
Daily Chart – EAT
#2 Above MA: The stock is currently trading above its 200-day SMA. This shows that the bulls are still in control.
[hana-code-insert name=’adsense-article’ /] #3 MACD Above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color).This is a possible bullish setup.
#4 Bullish RSI: The RSI has moved up from overbought levels and is currently above 50 and moving up. This indicates possible bullishness.
#5 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Double Bottom: The stock had recently formed a double bottom pattern. This is shown in pink color. A double bottom is a bullish pattern and a breakout from it may cause the stock to move higher.
#7 New Uptrend in Weekly Chart: As evident from the weekly chart, the stock had broken out from a downtrend and started a new uptrend. The stock is also above its 50-week SMA. This implies that the bulls are currently in control.
Weekly Chart – EAT
#8 Strong RSI: The RSI is above 50 and moving up. This is a bullish sign.
#9 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#10 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. EAT has taken support at the 50% Fibonacci support level of the upmove, as seen in the weekly chart.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of EAT at the current price of $45.86.
TP: Our target prices are $55 and $65 in the next 4-6 months.
SL: To limit risk, place a stop loss at $41.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 20% to 42% in the next 4-6 months. For a risk of $4.56, our target rewards are $9.14 and $19.14. This is a 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 uptrend channel. 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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