The American multinational telecommunications conglomerate, Verizon Communications Inc. (NYSE: VZ) seems to be poised for a surge as per its latest charts.
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock had recently formed an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. Currently, the stock has broken out of the ascending triangle pattern, indicating possible bullishness.
#2 Trading Above MAs: The stock is currently trading above both its short-term moving average of 50-day and the long-term moving average of 200-day SMA, which implies that the bulls are currently in control. This is a possible bullish sign.
#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 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 38.2% Fibonacci support level as seen in the weekly chart before moving higher again. The current levels appear to be further strong support area for the stock.
#6 MACD Above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
#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. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for VZ is if it trades above the price of $62.00. Alternatively, you can purchase the shares of VZ if it corrects to the price of $58.00.
TP: Our target prices are $67 and $75 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $55 (for entry near $58) and $59 (for entry near $62). Note that this stop loss is on a closing basis.
Our target potential upside is 8% to 29% in the next 3-5 months.
- Entry near $58: For a risk of $3.00, the target rewards are $9.00 and $17.00. This is a nearly 1:3 and 1:6 risk-reward trade.
- Entry near $62: For a risk of $3.00, the target rewards are $5.00 and $13.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 6x 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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