The New Jersey-based petroleum refiner and supplier of unbranded transportation fuels, heating oils, lubricants, petrochemical feedstocks, and other petroleum products, PBF Energy Inc. (NYSE: PBF) seems to be ready for a price correction in the near term according to its latest charts.
Bearish Move – Chart Indications
#1 Rising Wedge Pattern Breakdown: The daily chart shows that the stock was forming a rising wedge pattern during the past few months. This is a bearish pattern and is marked in purple color in the daily chart. The stock has currently broken down from the rising wedge pattern. This indicates that the price may move lower in the near-term.
Daily Chart – PBF
#2 Double Top Pattern Breakdown: The stock had recently formed a double top pattern. It is a bearish pattern and is marked in orange color in the chart. Currently, the stock has broken down from this pattern. This is a possible bearish sign.
[hana-code-insert name=’adsense-article’ /] #3 Bearish Stochastic: The stochastic is moving down in the daily chart.The %K line is also below the %D line. All these indicate possible bearishness.
#4 Price below 50-SMA: The stock is currently trading below the 50-day SMA, which indicates that the bears are currently wrestling for control.
#5 Bearish Aroon: The Aroon indicator shows bearishness as the Aroon up is below 30 and the Aroon down is above 70.
#6 MACD below signal line: The MACD line (blue color) is currently below the MACD signal line (orange color), indicating bearishness.
#7 Triangle Pattern Breakdown: The weekly chart shows that the stock has been forming a triangle pattern. Currently, the stock has broken down from this triangle pattern, indicating bearishness.
Weekly Chart – PBF
#8 %K below %D: The stochastic in the weekly chart also shows that the %K line is below the %D line. This indicates possible bearishness.
#9 Bearish RSI: The RSI is below 50 and moving down, indicating possible bearishness.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, the ideal sell level for PBF is between the range of $45.50 and $48.15. This range is marked as yellow dotted lines on the daily chart.
TP: Our target prices are $40 and $30 in the next 3-6 months.
SL: To limit risk, place a stop loss at $50.30. Note that this stop loss is on a closing basis.
Our target potential downside is 17% to 38% in the next 3-6 months.
- Sell at $48.15: For a risk of $2.15, our target rewards are $8.15 and $18.15. This is a nearly 1:4 and 1:8 risk-reward trade.
- Sell at $45.50: For a risk of $4.80, our target reward (TP#2) is $15.50. This is a nearly 1:3 risk-reward trade.
In other words, this trade offers nearly 3x to 8x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks upwards from the rising wedge pattern with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
Tara
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