The NJ-based American producer of canned soups and related products that are sold in 120 countries around the world, Campbell Soup Company (NYSE: CPB) seems to be poised for a price surge according to its charts.
#1 Symmetrical Triangle Pattern breakout: The daily charts shows that a symmetrical triangle pattern has been formed for the stock. This is marked in purple color 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 trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern. This is a possible bullish sign.
#2 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 %K above %D: The %K line of the stochastic is currently above the %D line, indicating possible bullishness.
#5 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend line.
This line is shown in purple color in the chart below.
This is a possible bullish sign.
#6 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 possible bullishness.
#7 IH&S Pattern Breakout: From the weekly chart, we can see that the stock has been consolidating in the form of an Inverted Head and Shoulders (IH&S) pattern. This is marked in the chart in pink color. An IH&S pattern is a bullish pattern. A breakout from an IH&S pattern is usually the sign of an upcoming bullish move. Currently, the stock has broken out of the pattern, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can buy the shares of CPB at the current price of $41.93.
TP: Our target prices are $50 and $55 in the next 4-6 months.
SL: To limit risk, place a stop loss at $38. Note that this stop loss is on a closing basis.
Our target potential upside is almost 19% to 31% in the next 4-6 months. For a risk of $3.93, our target rewards are $8.07 and $13.07. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x 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. 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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