Main Agreement
-
Shares in Berkshire Hathaway closed at a record high on Monday, boosted by gains in some of the conglomerate’s top holdings.
-
The stock broke out of a symmetrical triangle, a chart pattern that suggests a continuation of the current uptrend.
-
The benchmark predicts a short-term price target on the stock of $465, while the bar pattern projects a long-term target of around $500.
-
During the reversal, Berkshire shares may find support around $415 from the major trend line of the symmetrical triangle and near a multi-month uptrend line at $390.
Shares in Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) closed at a record high on Monday, supported by gains in some of the conglomerate’s top holdings, including Apple (AAPL), American Express, (AXP), Chevron (CVX), and Occidental Petroleum (OXY). Investors typically view the performance of the company’s stock, which trades at about 23 times analysts’ full-year operating profit forecasts, as an indicator of the health of the U.S. economy because of its diversification into a wide range of industries. .
Shares of Berkshire Hathaway added 2.4% to end Monday’s session at $434.42.
Amid the stock’s move to record highs, we’ll take a closer look at the technicals on Berkshire Hathaway’s weekly chart and identify important levels to watch out for.
The explosion from the symmetrical triangle
From the bottom to the middle of the 50- and 200-week moving averages (MAs) in early October last year. Berkshire’s stock is trending consistently higher. Recently, the price broke out of the textbook symmetrical triangle, a chart pattern that shows a continuation of the current uptrend.
Importantly, the initial breakout from the pattern occurred on the highest weekly trading volume since late February, suggesting conviction buying behind the move. Additionally, the relative strength index (RSI) is standing just below overbought levels to confirm strong price momentum in the stock.
Monitor these price levels amid further growth
Below, we will use two different technical analysis techniques to predict short-term and long-term price targets. These levels help us define a general area on the chart where Berkshire stock could climb and meet resistance if the price continues higher.
Short term price target
To predict a possible short-term price target, we can use the measurement principle. We do this by calculating the distance between the two trend lines of the symmetrical triangle near their widest point and applying that amount to the split area. For example, we add $50 to $415, which predicts a target at $465
Long Term Price Target
Investors can speculate on a long-term price target using a chart overlay of prior price action. This works by taking the bar pattern from the uptrend that preceded the symmetrical triangle and applying it to the most recent swing low. In this case, we take the pattern of bullish bars between October 2023 and February of this year and align it with the April low, which indicates a potential bullish target around $500.
Check out these key retargeting areas
Investors looking for a key pullback level should keep an eye on the $415 area, where Berkshire shares are likely to find buying interest near the main symmetrical triangle trendline. A more significant reversal could see shares retrace a multi-month rising trend line around $390, with this location also near the 50-week MA.
Comments, opinions and analysis expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more information.
As of the writing date of this article, the author does not own any of the above securities.
Read the original article on Investopedia.