West Fraser Timber (WFG) was raised to an outperform fundamental rating by a sell side firm here on Tuesday. Let's check out the charts and indicators of the diversified wood products company to see what might lie ahead for its stock.
In this daily bar chart of WFG, below, I can see that buying interest (aka support) has developed several times around $70 on WFG. Prices are trading below the declining 200-day moving average line but we could see WFG soon close above the 50-day moving average. The trading volume is hard to read but the math-driven On-Balance-Volume (OBV) line has been firm to slightly rising from late September. The Moving Average Convergence Divergence (MACD) oscillator has been improving but is still below the zero line and an outright buy signal.
In this weekly Japanese candlestick chart of WFG, below, I can see that the $70 level has been important for a very long time. Prices are trading below the declining 40-week moving average line but that could change soon. The weekly OBV line has been stable after a strong rise in 2021. The MACD oscillator is close to a cover shorts buy signal.
In this daily Point and Figure chart of WFG, below, I can see a potential downside price target in the $65 area. A trade at $77 or higher could improve the picture and generate an upside price target.
Bottom line strategy: Regular readers of Real Money know I am bullish on the material sector and lumber is included in that view. Traders could go long WFG when prices make two consecutive closes above $77. Risk to $68.
