The American parent company of Avis Car Rental, Budget Car Rental, Budget Truck Rental, Payless Car Rental, Apex Car Rentals, Maggiore Group, and Zipcar, Avis Budget Group Inc. (NASDAQ: CAR) seems to be getting ready for a price surge according to its latest charts.
Bullish Move – Chart Indications
#1 Channel Breakout: As you can see from the daily chart of CAR, the stock was trading within an uptrend channel for the past several months. This channel is marked on the chart in pink color. After numerous unsuccessful moves to break out, the stock has finally broken out of this channel. This looks like a bullish indication.
#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 as a potential buy signal.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#4 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.
#5 Bullish ADX and DO+I: The ADX line has started to move up from below –DI and +DI lines. The +DI line and ADX lines are also currently above the –DI line. This indicates possible bullishness.
#6 Near support level: The daily chart shows that the stock has now broken out of a long-term resistance level, which is marked as an orange dotted line. This resistance level will now act as a support level. This is a possible bullish sign.
#7 Double Bottom Pattern Breakout: CAR’s weekly chart shows that the stock had broken out of a double bottom pattern. This is marked on the weekly chart in pink color. The breakout level of the double bottom pattern generally acts as a good support level.
#8 Bullish Stochastic: The stochastic indicator shows that the %K line is above %D line, indicating possible bullishness.
#9 Bullish MACD: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CAR if it trades above yesterday’s close. This translates to a price of around $40.90.
TP: Our target prices are $45 and $50 in the next 3-5 months.
SL: To limit risk, place a stop loss below $38.20. Note that the stop loss is on a closing basis.
Our target potential upside is 10% to 22% in the next 3-5 months.
For a risk of $2.70, our first target reward is $4.10 and the second target reward is $9.10. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel support 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
Strange change at your bank [sponsor]At least 41 major US banks have just made a drastic change to the way money in America works. It could have some major implications for you, your money and your retirement. But it's crucial you understand what's happening, before these changes get applied to your bank account. Here's everything you need to know.