The energy company in the Northeastern and Mid-Atlantic United States, Public Service Enterprise Group Inc. (NYSE: PEG) seems to be gearing up for a surge as per its latest charts.
#1 Ascending Triangle Pattern: The daily chart shows that the stock has been forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in orange color lines. 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. Currently, the stock looks ready for a breakout.
#2 Trading Above MA: The stock is currently trading above its short-term moving average of 50-day SMA, which implies that the bulls are currently in control.
#4 Bullish Stoch: The %K line of the stochastic is currently above the %D line. The stoch is also moving up from oversold levels. All these indicate bullishness.
#5 Bullish RSI: The Relative Strength Index is currently nearing 50, indicating the strength of the current upmove.
#6 Above support area: The weekly chart shows that the stock had recently taken support at a long-term support area before moving higher. This support area is marked as a green color dotted line. This seems like a bullish indication.
#7 Bullish Stoch: The weekly chart shows that the %K (blue) line of the stochastic is above the %D (orange) line, which is a possible bullish indication.
#8 Bullish RSI: The RSI had started moving higher from oversold levels and is currently near 50. This is a possible bullish sign.
#9 Bullish MACD: The weekly chart shows that the MACD line (blue color) has currently crossed above the MACD signal line (orange color), which is a positive indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of PEG if it breaks out of the ascending triangle pattern. This translates to a price of around $56.
TP: Our target prices are $60 and $65 in the near-term.
SL: To limit risk, place a stop loss near $53.25. Note that this stop loss is on a closing basis.
Our target potential upside is 7% to 16% in the next 3-6 months.
For a risk of $2.75, the target rewards are $4.00 and $9.00. This is a nearly 1:2 and 1:3 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 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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