The company that provides cleaning products and solutions, Tennant Company (NYSE: TNC) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, TNC had recently formed a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – TNC
#2 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the daily chart, indicating a bullish bias.
#3 Above MA: The stock is currently trading above the 50-day SMA, indicating that the bulls are currently in control.
#4 %K above %D in Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line in the daily chart. This indicates possible bullishness.
#5 IH&S Pattern: The stock has been forming an Inverted Head and Shoulders (IH&S) pattern.
This pattern is marked in orange color in the daily chart.
The stock is currently near the breakout level of the IH&S pattern. This is a good support level and seems like a good area for the stock to bounce upwards.
#6 Bullish ADX and DI: The ADX indicator shows bullishness as (+DI) is greater than (-DI) and the ADX line is rising. This points to a possible upmove in the near-term.
#7 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart as well, indicating possible bullishness.
Weekly Chart – TNC
#8 Bullish RSI: As you can see from the weekly chart, RSI is currently above 50 and moving up, indicating bullishness. The stock is also trading above its 50-week and 200-week SMA, indicating a bullish bias.
#9 Strong Supports: The weekly chart shows that there are strong support levels nearby for the stock. These are marked as blue and pink dotted lines. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of TNC if it breaks out of the IH&S pattern and closes above $66.20.
TP: Our target prices are $75 and $82 in the next 4-6 months.
SL: To limit risk, place a stop loss at $63.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 13% to 24% in the next 4-6 months. For a risk of $2.90, our target rewards are $8.80 and $15.80. This is an almost 1:3 and 1:5 risk-reward trade.
In other words, this trade offers nearly 3x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the IH&S and symmetrical triangle pattern. 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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