The Bulls Are in Control of This Stock

Louisiana-Pacific Corporation (NYSE: LPX) seems poised for a price surge based on its latest charts. The company provides building solutions for applications in new home construction, repair and remodeling, and outdoor structure markets. It operates through three segments: Siding, Oriented Strand Board (OSB), and LP South America (LPSA).

The company’s portfolio spans oriented strand board panels, structural solutions, and branded siding products aimed at both new construction and the repair and remodel market. Key brands include LP SmartSide Trim & Siding and LP BuilderSeries Lap Siding.

Bullish Indications

#1 Falling Wedge Pattern: As you can see from the daily chart, the stock had been forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock currently looks poised for a breakout from the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.

#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA, indicating that the bulls are gaining control. This is a positive indication.

#3 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.

#4 Bullish RSI: The RSI is currently above 50 and moving higher in the daily chart. This indicates possible bullishness.

#5 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher. The stock is also trading above its 200-week SMA, indicating that the bulls are still in control.

#6 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart, indicating bullishness.

#7 Bullish RSI: In the weekly chart, the RSI is currently nearing 50 and moving higher. This is a possible bullish sign.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, you can purchase shares of LPX above the price of around $85.50.

TP: Our target prices are $92.00 and $97.00 in the next 3-6 months.

SL: To limit risk, place a stop-loss at $82.00. Note that the stop-loss is on a closing basis.

Our target potential upside is 8% to 13% in the next 3 to 6 months.

For a risk of $3.50, our target rewards are $6.50 and $11.50. 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 from the falling wedge pattern 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

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Source: Trades of the Day