The global human resource consulting firm based in Menlo Park, California, Robert Half International Inc. (NYSE: RHI) 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 of RHI, the stock has been forming a falling wedge pattern for the past few months. This is marked as purple color lines. The stock has currently 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.
#2 RSI Strong: Relative strength index (RSI) is currently above 50. This indicates the strength of the current upmove.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#5 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again.
RHI has taken support at the 38.2% Fibonacci support level of the upmove, as seen in the weekly chart.
This is a very good support level for the stock and indicates that stock is quite unlikely to break down from here.
#6 Flag Breakout in Weekly Chart: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. Currently, the stock has broken out of the flag. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
#7 Oversold RSI Moving up: Relative strength index (RSI) is currently moving up after reaching oversold levels. This indicates the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for RHI is if it closes above the 50-day SMA, at around $59.60.
TP: Our target prices are $70 and $80 in the next 4-6 months.
SL: To limit risk, place a stop loss below $55.20. Note that the stop loss is on a closing basis.
Our target potential upside is 17% to 34% in the next 4-6 months. For a risk of $4.40, our first target reward is $10.40 and the second target reward is $20.40. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x 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 energy sector.