The Oklahoma City-based holding company, which engages in the provision of physical delivery and related services for both electricity and natural gas, OGE Energy Corp. (NYSE: OGE) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle pattern Breakout: OGE’s daily chart shows that the stock has broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. A breakout from a bullish pattern like this usually indicates the possibility of an upmove in the near-term.
Daily Chart – OGE
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#3 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.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has moved up from below (-DI) and (+DI).
#5 Pennant Pattern Breakout: The weekly chart shows that the stock has currently broken out of a pennant pattern.
This pattern is marked in purple color dotted lines. This is a possible bullish sign.
Weekly Chart – OGE
#6 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
#7 Above MAs: In the weekly chart as well, the stock is currently trading above both its 50-week and 200-week SMA, which implies that the bulls are now in control.
#8 Bullish ADX and DI: In the weekly chart as well, the ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started to move up from below (-DI) and (+DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of OGE if it corrects to the support level of around $44.00 to 44.50.
TP: Our target prices are $50 and $60 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $42.20. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 12% to 36% in the next 3-5 months.
- Entry at $44: For a risk of $1.80, the target rewards are $6.00 and $16.00. This is a nearly 1:3 and 1:9 risk-reward trade.
- Entry at $44.50: For a risk of $2.30, the target rewards are $5.50 and $15.50. This is a nearly 1:2 and 1:7 risk-reward trade.
In other words, this trade offers nearly 2x to 9x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending 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 its sector.
Happy Trading!
Tara
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