The well-known American luxury jewelry and specialty retailer headquartered in New York City, Tiffany & Co. (NYSE: TIF) seem to be poised for a price surge as per its latest charts.
#1 RSI –Price Bullish Divergence: There is a bullish divergence between RSI and price in the daily chart. While the price formed a lower low, the RSI formed to a higher low. This is marked as pink dotted lines in the daily chart. This is a bullish sign.
#2 Strong Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line and moving up. This indicates a possible reversal from the current downtrend.
This points to a possible reversal.
#4 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.
#5 Bullish Engulfing: The daily chart shows that the latest candlestick pattern is a bullish engulfing candlestick pattern, which is marked as an orange ellipse.
This is a bullish pattern that indicates that the price may move higher in the short term.
#6 Fibonacci support: As seen in the weekly chart, the stock had taken support at the 23.60% Fibonacci retracement level before surging back again. This seems like a good area for bounceback.
#7 Oversold Stochastics: In the weekly chart, stochastics oscillator is currently near oversold levels and moving up. The %K (blue) line has also crossed above the %D (orange) line. This indicates a possible reversal from the current short-term downtrend.
#8 Bullish RSI: The weekly chart also shows that the RSI is currently moving up after reaching oversold levels. This points to a possible reversal from the prevailing downtrend.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of TIF at the current price of $85.17. The rest can be purchased once the stock crosses above $95.
TP: Our target prices are $100 and $110 in the next 3-6 months.
SL: To limit risk, place stop-loss at $76.30 (for entry near $85.17) and $88.70 (for entry near $95). Note that stop loss is on a closing basis.
Our target potential upside is 16% to 29% in the next 3-6 months.
- Entry at $85.17: For a risk of $8.87, our target rewards are $14.83 and $24.83. This is a 1:2 and 1:3 risk-reward trade.
- Entry at $95: For a risk of $6.20, our target reward (TP#2) is $15. This is a 1:2 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 from the uptrend line with a 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.
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