The United States credit card processor, merchant acquirer and bank credit card issuer, Total System Services, Inc. (NYSE: TSS) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: The daily chart of TSS shows that the stock has broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The breakout level of the ascending triangle pattern generally acts as a good support level.
Daily Chart – TSS
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]`#3 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 bullish.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
However, it is currently near overbought levels, indicating that a correction may be imminent before the next upmove.
#5 Unbroken Uptrend: The weekly chart shows that the stock’s uptrend is still unbroken, as it has been forming higher lows and higher highs.
Weekly Chart – TSS
#6 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates bullishness.
#8 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and ADX and (+DI) are above (-DI) in the weekly chart.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level of TSS is if the stock corrects back near to the breakout level of the ascending triangle pattern. This translates to a buy level between $100 and $108.
TP: Our target prices are $115 and $130 in the next 4 to 6 months.
SL: To limit risk, place a stop loss around $94.80 (for entry near $100) and $103 (for entry near $108). Note that this stop loss is on a closing basis.
Our target potential upside is 15% to 30% in the next 3-5 months.
- Entry at $100: For a risk of $5.20, the target rewards are $15.00 and $30.00. This is a nearly 1:3 and 1:6 risk-reward trade.
- Entry at $108: For a risk of $5.00, the target reward (TP#2) is $22. This is a nearly 1:4 risk-reward trade.
In other words, this trade offers nearly 3x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending triangle 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 its sector.
Happy Trading!
Tara
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