The rally in CF Industries Holdings (CF) is only about three months old, but the chart pattern and indicators suggest we have a lot more on the upside for this producer of nitrogen fertilizer. Join me in looking at the latest charts below.
In this one-year daily chart of CF, above, we can see how prices bottomed from June through early November. Prices turned up smartly in November to close above both the 50- and 200-day moving averages. In late December there is a bullish golden cross of these two moving averages and both averages have positive slopes now. Leading prices, the On-Balance-Volume (OBV) line bottoms in June and starts up in August, telling us that aggressive buying preceded the price strength. Momentum has slowed since the strong rally in November, but I do not anticipate it will mean that prices correct.
This three-year weekly chart of CF, above, shows both the big decline of 2015 and the recovery so far. CF is now above the rising 40-week moving average line. The weekly OBV line is pointed up and the MACD oscillator crossed above the zero line in December for an outright go long signal.
This Point and Figure chart of CF, above, shows the breaking of a major downtrend along with the uninterrupted rally and a major upside price target of $67. Time is not important on a Point and Figure chart, so we have no idea when or if $67 might be reached.
Bottom line: Traders and investors could go long CF here and on a close above $37.50. I would use a sell stop below $32 for now, but look to raise it on a close above $37.50.
