Railroad and logistics firm CSX Corp. ( CSX) is rallying Friday morning on the heels of a better-than-expected earnings report Thursday evening. Let's review the charts and indicators before the train leaves the station.
In the daily bar chart of CSX, below, I can see that the shares are poised to make an upside move. Prices are trading above the 50-day moving average line and the bottoming 200-day moving average line.
The On-Balance-Volume (OBV) line made a low in mid-March and has inched higher signaling a quiet switch towards aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator has crossed above the zero line for an outright buy signal.
In the weekly Japanese candlestick chart of CSX, below, I can see that the shares are pushing up above the 40-week moving average line.
The weekly OBV line is turning upwards from a higher low. The MACD oscillator is crossing to the upside for a cover shorts buy signal and potentially a cross above the zero line soon for an outright buy message.
In this daily Point and Figure chart of CSX, below, I can see a potential price target in the $34 area.
In this second Point and Figure chart of CSX, below, I used weekly price data. The chart shows a downside price target of $27 but if the daily chart (above) works out with a rally to $34 the weekly chart will turn bullish.
Bottom-line strategy: Traders could go long CSX at current levels and on strength above $33. Risk to $29.50.
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A lot of downtrodden smaller stocks have rallied, but one day does not a trend make.
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