International Paper (IP) broke out yesterday, shoving its way above resistance to make a new 52-week high at $33.22. The breakout is a buy signal for traders this week. Here's how the setup worked.
Shares of International Paper have spent most of the year stock in a horizontal range, a phenomenon that I call an If/Then setup. It's called that because the channel provides traders with a contingent setup depending on which direction shares of IP exited the channel. Because they broke out to the upside, this stock becomes an upside trade.
The channel was relatively narrow in IP, suggesting that the target price on this stock also relatively nearby. But the potential gains get extended a bit by virtue of the fact that IP plowed its way through a new 52-week high.With investor psychology looking strong in this stock, now looks like a favorable opportunity to be a buyer. If you decide to take this trade, I'd recommend keeping a protective stop right under $31 support. International Paper shows up on a recent list of 4 Favorite Value Stocks. To see these plays in action, check out the Technical Setups for the Week portfolio at Stockpickr. -- Written by Jonas Elmerraji in Baltimore.
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