Goodyear Tire (GT) shares gapped sharply higher last week on news that activist investor Elliott Management took a stake in the tire manufacturer. Can the rally continue and what price targets could be reached? Let's check.
In the daily bar chart of GT, below, I can see a bottom pattern taking shape from October. The shares traded sideways with dips to the $10 area being bought. Trading volume shows an increase in activity from early November.
The On-Balance-Volume (OBV) line has trended higher from late December and tells me that buyers of GT have been more aggressive than sellers. The Moving Average Convergence Divergence (MACDC) oscillator is in a bullish alignment above the zero line. The 200-day moving average line is flat but the slope of the 50-day line has turned positive.
In the weekly Japanese candlestick chart of GT, below, I can see that the shares have rallied strongly above the 40-week moving average line.
The weekly OBV line turned upwards before the Elliott news. The MACD oscillator has turned upwards and is very close to an outright buy signal.
In this daily Point and Figure chart of GT, below, I can see a potential $25 price target.
In this weekly Point and Figure chart of GT, below, I used a five-box reversal filter, which suggests a price target in the $33 area.
Bottom-line strategy: GT gapped higher on Thursday and held those gains on Friday. Traders could go long GT in the $15-$14 area risking to $12. My price targets are $25 and then $33.
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