Humana on the Verge of a Major Upside Breakout

 | Apr 25, 2017 | 1:44 PM EDT
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Humana   (HUM) has made a large saucer-like high level base pattern the past two years. Prices now look poised for a major upside breakout over resistance around $220.

Now that I have your attention let's examine the latest charts and indicators to see where and when to buy HUM, how much to risk and our projected target price.

In this updated daily bar chart of HUM, below, we can see an ascending triangle-like price pattern from early December. Prices meet resistance around $220 but we can see higher lows in January, February, and then March. The highs in December and March are roughly the same. HUM is above the rising 50-day moving average line and above the bullish/rising 200-day moving average line. Interestingly the On-Balance-Volume (OBV) line made a low in July and has bee rising since, telling us that buyers of HUM have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator just turned up from the zero line for a fresh outright go long signal.

In this three-year weekly chart of HUM, below, we can use our imagination to visualize a rounded or saucer-like pattern from April 2015 as prices top out at around $220 and decline to rebase around $160 or so and then climb back to $220. In the first half of the base HUM is below the declining 40-week moving average and on the right hand side HUM is above the rising 40-week average line. The movement of the OBV line is very constructive. The OBV line makes a low in July 2015 and starts to rise and doesn't stop. The entire rise of the OBV line confirms the price advance and tells us that accumulation has been going on even when prices have moved sideways. The weekly MACD oscillator turned up in November 2016 and is still bullish and poised for a fresh buy signal.

In this Point and Figure chart, below, the first high for HUM is at $216 and the recent trade in March at $220 would be a major upside breakout. Prices retreated but turned up again. HUM is ready to breakout again. A trade at $220 or $224 will open the way for a longer-term advance to around $290.

Bottom line - if you can risk below $210 go long HUM here and add on a close above $220 or on a trade above $224. Target price $290.

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