The U.S. regional bank holding company providing retail banking, commercial banking, commercial real estate lending, private banking, specialized financial services, and insurance services, Associated Banc Corp (NYSE: ASB) shows signs of an upcoming price surge according to its latest charts.
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 is near the breakout level of the symmetrical triangle pattern, indicating possible bullishness.
#2 RSI near Oversold Levels: The daily chart shows that the RSI is near the oversold levels. This indicates that the selling pressure of the stock is easing up and the stock may reverse its current downmove.
#3 Near Lower Bollinger Band: The stock had recently moved towards the lower Bollinger band and has now started moving upwards from there. At the same time, RSI is above 30 and moving up. This is usually a typical bullish setup based on RSI-Bollinger band.
#4 IH&S Pattern: As you can see from the weekly chart, the stock is currently forming 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. A breakout from this pattern usually indicates that the stock may move higher in the short term.
#5 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for ASB is above the breakout level of the symmetrical triangle pattern and IH&S pattern. This translates to a price of around $23.70.
TP: Our target prices are $29 and $35 in the next 4-6 months.
SL: To limit risk, place a stop loss at $21.80. Note that this stop loss is on a closing basis.
Our target potential upside is almost 22% to 48% in the next 4-6 months. For a risk of $1.90, our target rewards are $5.30 and $11.30. This is an almost 1:3 and 1:6 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 symmetrical triangle pattern and IH&S 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.
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