The American clothing company based in Winston-Salem, North Carolina, that was spun off by the Sara Lee Corporation, Hanesbrands Inc. (NYSE: HBI) shows signs of an upcoming price surge according to its latest charts.
#1 Channel Breakout: The daily chart shows that the stock was trading within a channel for the past few months. This channel is marked in the daily chart in pink color lines. Currently, the stock has broken out of this channel, indicating that it has the potential to surge ahead.
#2 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). This indicates a possible bullish bias.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX is starting to raise from below both (+DI) and (-DI).
#5 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 is a possible bullish indication.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. This downtrend line is marked in purple color line in the chart. The stock is also trading above its 50-week SMA. All these indicate possible bullishness.
#7 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, indicating possible bullishness.
#8 Bullish MACD: The MACD line is currently above the MACD signal line in the weekly chart as well, indicating possible bullishness.
#9 Bullish Stoch: The stochastic is currently moving up and the %K line (blue color) is currently above the %D (orange color) line in the weekly chart. This usually indicates bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for HBI is above the price of around $15.
TP: Our target prices are $18 and $22 in the next 3-6 months.
SL: To limit risk, place a stop loss at $13. Note that this stop loss is on a closing basis.
Our target potential upside is almost 20% to 47% in the next 3-6 months.
For a risk of $2.00, our target rewards are $3.00 and $7.00. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x rewards when compared to risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel. 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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