The holding company of businesses providing integrated logistics solutions, ArcBest Corp (NASDAQ: ARCB) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock was forming a symmetrical triangle pattern during the past few weeks. This pattern is shown as purple color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out and is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers.
Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, which is a possible bullish sign.
Daily Chart – ARCB
#2 Channel Breakout: The stock was trading within a downtrend channel for the past several weeks as seen in the daily chart.
The stock has currently broken out of the channel, which indicates possible bullishness.
#3 Above MA: The stock is currently trading above its 50-day SMA.
This implies that the bulls are currently in control.
#4 Bullish RSI: The RSI is currently above 50 and moving up in the daily chart, indicating possible bullishness.
#5 Bullish Stochastic: The weekly chart shows that the %K line is above the %D line in the stochastic.
This indicates that an upmove may be imminent.
Weekly Chart – ARCB
#6 Bullish MACD: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#7 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. ARCB had taken support at the 23.6% Fibonacci support level before surging again, as seen in the weekly chart. So, this seems like a strong support area for the stock.
#8 Bullish RSI: The RSI is currently nearing 50 and moving higher, after reaching oversold levels. This seems like a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ARCB is above $32.50.
TP: Our target prices are $40 and $45 in the next 4-6 months.
SL: To limit risk, place stop-loss at $27.90. Note that the stop loss is on a closing basis.
Our target potential upside is 23% to 39% in the next 4-6 months.
For a risk of $4.60, our target rewards are $7.50 and $12.50. This is an almost 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 channel breakout level with a 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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