The leading worldwide provider of equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry, National-Oilwell Varco, Inc. (NYSE: NOV) seems to be gearing up for a surge as per its latest charts.
#1 Ascending triangle pattern breakout: NOV’s daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish formation that usually forms during an uptrend as a continuation pattern. This is marked on the daily chart in purple color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level.
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies 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 Downtrend Broken: The weekly chart shows that the stock has broken out of a short-term downtrend. This downtrend line is marked in purple color in the weekly chart below. A break out from downtrend is usually a 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 as well. This indicates possible bullishness.
#7 MACD above Signal Line: In the weekly chart, the MACD line is above the MACD signal line which is a possible bullish signal.
#8 Other positive indications: The weekly chart shows that the stock is trading above its 50-week SMA. The ADX indicator also shows bullishness as the [+DI] line is currently above the [-DI] as well as the ADX line.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for NOV is if it closes above the resistance level of $25.
TP: Our target prices are $30 and $35 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss at $22.40. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 20% to 40% in the next 4-6 months.
For a risk of $2.60, the target rewards are $5.00 and $10.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x 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.
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