The commercial real estate services and investment firm CBRE Group Inc. (NYSE: CBRE) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart of CBRE shows that the stock has been trading within a falling wedge pattern during the past few months and has currently broken out from it. This pattern is marked in the daily chart in pink color. Once the stock moves breaks out from a bullish pattern like Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – CBRE
#2 Double Bottom Breakout: The stock has currently broken out of a double bottom pattern as marked in the daily chart. This pattern is marked in orange color. The double bottom breakout level (marked as orange color dotted line) typically acts as a support for the stock and is a good point for a potential bounce back.
#4 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color).
This is a possible bullish setup.
#5 Bullish ADX and DI: The ADX indicator in the weekly chart shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
#6 Unbroken Uptrend: The weekly chart shows that the stock is still on an uptrend as it has been forming higher highs and higher lows. The stock has also broken out of a double bottom pattern, indicating bullishness.
Weekly Chart – CBRE
#5 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Other Bullish Indications: The MACD line (blue color) is above the signal line (orange color) in the weekly chart. The RSI is above 50 and moving up. The stock is also currently trading above both 50-week and 200-week SMA. All these indicate a possible bullish setup.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of stock at the current price of $45.30 and the rest if the stock corrects to breakout level of the falling wedge pattern and double bottom pattern. This translates to a price between $42 and $44.
TP: Our target prices are $50 and $60 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $41 (for entry around $42 to $44) and $42.80 (for entry around $45.30). Note that this stop loss is on a closing basis.
Our target potential upside is almost 10% to 43% in the next 4-6 months.
- Entry at $42: For a risk of $1.00, our first target reward is $8.00 and the second target reward is $18.00. This is a 1:8 and 1:18 risk-reward trade.
- Entry at $44: For a risk of $3.00, our first target reward is $6.00 and the second target reward is $16.00. This is a 1:2 and 1:5 risk-reward trade.
- Entry at $45.30: For a risk of $2.50, our first target reward is $4.70 and the second target reward is $14.70. This is a 1:2 and 1:6 risk-reward trade.
Overall, this trade offers nearly 2x to 18x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge 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