The American company that makes metal beverage and food cans, metal aerosol containers, metal closures, and specialty packing, Crown Holdings, Inc. (NYSE: CCK) 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, the stock had been forming a falling wedge pattern during the past few weeks. This is marked as blue color lines. The stock had recently broken out of the falling wedge pattern after taking support at the bottom of the wedge. 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 – CCK
#2 Bullish MACD: 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.
[hana-code-insert name=’adsense-article’ /] #3 Above MA: The stock is currently trading above the 50-day SMA, which implies that the bulls are currently in control.#4 Bullish Stochastic: The %K line is above the %D line in the stochastic, indicating bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30.
This indicates bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out from a downtrend. This downtrend line is marked in blue color. This is a bullish sign.
Weekly Chart – CCK
#7 Strong RSI: The RSI is above 50 and moving up, indicating strength.
#8: Breakout from Consolidation Area: In the weekly chart, we can see that the stock has recently broken out from a consolidation area. This is marked as a green rectangle. This indicates that the momentum is increasing and the price may move higher.
#9 Rising Stochastic: The stochastic is moving up from below 20. The %K line is also above the %D line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of the CCK if it corrects to the range between $42.50 and $46.00.
TP: Our target prices are $55 and $65 in the next 4-6 months.
SL: To limit risk, place a stop loss below $38.50. Note that the stop loss is on a closing basis.
Our target potential upside is 29% to 53% in the next 4-6 months.
- Entry at $42.50: For a risk of $4, our first target reward is $12.50 and the second target reward is $22.50. This is a nearly 1:3 and 1:7 risk-reward trade.
- Entry at $46: For a risk of $7.50, our target reward (TP#2) is $19. This is a nearly 1:3 risk-reward trade.
In other words, this trade offers 3x to 7x 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
[hana-code-insert name=’MMPress’ /]