The Pennsylvania-based real estate investment trust company, Independence Realty Trust Inc. (NYSE: IRT) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Pattern: The daily chart of IRT shows that the stock was trading within a falling wedge pattern for the past few months. This is marked in the daily chart in purple color. Currently, the stock has broken out of this falling wedge pattern. A falling wedge pattern is a bullish pattern and a breakout from this pattern shows that the stock has gained momentum and has the potential to move further up.
Daily Chart – IRT
#2 IH&S Breakout: As you can see from the daily chart, the stock has also broken out of an Inverted Head and Shoulders (IH&S) pattern within the falling wedge pattern. This IH&S pattern is marked in the chart in orange color. An IH&S pattern is a strong bullish pattern and a breakout from this pattern indicates that the stock may move higher in the short term.
[hana-code-insert name=’adsense-article’ /]#3 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day moving averages, indicating a bullish bias for the stock.#4 Inside Bar: Currently, a bullish candlestick pattern of an inside bar has been formed in the daily chart. This is the sign of a possible bullish bias.
#5 RSI moving up: The RSI is above 50 and moving up on the chart, indicating strength.
#6 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.
#7 Unbroken uptrend: The weekly chart shows that the stock is in an unbroken uptrend as it has been forming higher highs and higher lows during the past several months.
Weekly Chart – IRT
#8 MACD crossover: In the weekly chart, the MACD (light blue color) is currently crossing above the MACD signal line (orange color) and starting to move upwards. A potential buy signal is generated when the MACD line crosses above the MACD Signal Line. This indicates a possible bullish setup.
#9 Bullish Stochastic: As you can see from the weekly chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of IRT at the current price of $10.24.
TP: Our target prices are $15 and $18 in the next 3 to 6 months.
SL: To limit risk, place a stop loss below $9.60. Note that this stop loss is on a closing basis.
Our target potential upside is almost 46% to 76% in the next 3-6 months.
For a risk of $0.64, our first target reward is $4.76 and second target reward is $7.76. This is a 1:7 and 1:12 risk-reward trade.
In other words, this trade offers nearly 7x to 12x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the Inverted Head and Shoulders pattern breakout level. 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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