The real estate investment trust company headquartered in New Jersey, Monmouth R.E. Inv. Corp. (NYSE: MNR) seems to be getting ready for a surge in its price as per the latest charts.
Bullish Move – Chart Indications
#1 Ascending triangle pattern Breakout: The daily chart of MNR shows that the stock has 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 breakout level of the ascending triangle pattern generally acts as a good support level.
Daily Chart – MNR
#2 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#3 Above MAs: The stock is currently trading above both 50-day as well as 200-day SMA.
This means that the bulls are currently in control.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#5 Bullish RSI: The RSI is currently above 50 and moving up.
This indicates possible bullishness.
#6 Support at Fibonacci Level: The weekly chart shows that the stock had been on an uptrend after which it has been correcting. It is now moving up after taking support near the 38.2% Fibonacci retracement level of this move and is moving upwards. Stocks usually retrace to any of the key Fibonacci levels before resuming its upmove. So, this seems like a good support area.
Weekly Chart – MNR
#7 MACD Above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#8 RSI above 50: The RSI is moving up after reaching above 50. This is a possible bullish sign.
#9 Flag Pattern: The weekly chart shows that the stock is currently forming a flag pattern. Once it breaks out from this pattern, the stock may move higher.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of MNR at the current price of $14.19.
TP: Our target prices are $18 and $24 in the next 3-5 months.
SL: To limit risk, place a stop loss below $12.10. Note that the stop loss is on a closing basis.
Our target potential upside is 27% to 69% in the next 3-5 months. For a risk of $2.09, our first target reward is $3.81 and the second target reward is $9.81. 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 ascending triangle 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 sector.
Happy Trading!
Tara