NEW YORK (TheStreet) -- TRI Pointe Homes (TPH - Get Report) is breaking above multiple levels of technical support, and a move may be underway to catch up to the broader measure of the residential construction industry. The homebuilder has underperformed the iShares U.S. Home Construction (ITB - Get Report) exchange-traded fund by 24% over the last year and 5.5% year-to-date.
This year TRI Pointe's stock price has been trading under the declining trend line of what developed into a large wedge formation, and last month it began to further consolidate in a small rising triangle pattern inside the larger wedge. The downtrend line and the interior triangle top intersected at the $15 level, and that nexus of resistance was decisively penetrated in Friday’s session.
The relative strength index at the top of the page is a measure of price momentum, and the move above its centerline reflects the positive price action over the last two weeks. At the bottom of the page is the money flow index, a volume-weighted measure of money flow, and it is above its centerline, indicating positive money flow momentum.
The stock is a buy at its current level, with a position size that accommodates an initial stop under the rising triangle trend line drawn off the May and June lows. The smaller triangle pattern projects a target price, measured off the height of the pattern, above $16, but the larger wedge pattern projects a target significantly higher.Click here to see the below chart in a new window.