The company that is engaged in the business of operating a system of petroleum product and crude pipelines, storage tanks, distribution terminals, loading rack facilities, and refinery processing units, Holly Energy Partners, L.P. (NYSE: HEP) seem poised for a price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: A symmetrical triangle pattern is seen in the daily chart of HEP. This pattern represents a period of consolidation before the price breaks out and is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating bullishness.
Daily Chart – HEP
#2 Above MAs: The stock price is currently above both 50-day and 200-day SMA. This is a bullish sign.
This is a possible bullish sign.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color).
This indicates a possible bullish setup.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Downtrend Broken: The weekly chart of HEP shows that the short-term downtrend has been broken (marked as a blue line) and the stock is poised for an upmove. The price is also currently above the 50-week and 200-week SMA, indicating bullishness.
Weekly Chart – HEP
#7 %K above %D: In the weekly chart, the %K line (light blue color) is above the %D line (orange color) in the stochastics. This is a possible bullish sign.
#8 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color), indicating bullishness.
#9 Good support level: There is a good support level near $30 in the weekly chart. This is marked as a green dotted line. The stock had recently consolidated for a while at that level before moving higher.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of HEP at the current price of $32.95.
TP: Our target prices are $45 and $55 in the next 4-6 months.
SL: To limit risk, place a stop loss at $28.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 37% to 67% in the next 4-6 months. For a risk of $4.45, our target rewards are $12.05 and $22.05. This is a 1:3 and 1:5 risk-reward trade.
In other words, this trade offers nearly 3x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical 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 the sector.
Happy Trading!
Tara
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