The American company that makes self-service kiosks, point-of-sale terminals, automated teller machines, check processing systems, barcode scanners, and business consumables and provide IT maintenance support services, NCR Corporation (NYSE: NCR) seems to be gearing up for a surge after a slight pullback as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: NCR’s daily chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. The base of the triangle also generally acts a good support level.
Daily Chart – NCR
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This implies that the bulls are still in control.
#3 MACD above signal line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#4 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#5 IH&S Breakout in Weekly chart: As you can see from the weekly chart, the stock has recently broken out of an Inverted Head and Shoulders (IH&S) pattern.
This IH&S pattern is marked in the chart in pink color.
An IH&S pattern is a strong bullish pattern and indicates that the stock may move higher in the short term.
Typically, a stock corrects back to the breakout level of the IH&S pattern before resuming its upmove.
Weekly Chart – NCR
#6 MACD above signal line: In the weekly chart as well, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#7 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the buy level of NCR is if it pulls back and reaches the breakout level of ascending triangle and IH&S pattern. This translates to a price of around $30.
TP: Our target prices based on the breakout from Ascending Triangle pattern are $40 and $50.
SL: To limit risk, place a stop loss below $27.60. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 33% to 67% in the next 6 months. For a risk of $2.40, the target rewards are $10 and $20. This is a nearly 1:4 and 1:8 risk-reward trade.
In other words, this trade offers nearly 4x to 8x 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 pattern and 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.
— Tara Young
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