Source: TradingView.com
Key Takeaways
Berkshire Hathaway Inc. shares closed at a record high on Monday, buoyed by gains in some of the conglomerate’s key holdings.
The stock price has broken out of a symmetrical triangle, a chart pattern that suggests a continuation of the current uptrend.
Measurement principles predict a short-term target price for the stock at $465, while bar patterns predict a long-term target price of around $500.
During a retracement, Berkshire shares could find support from the upper trendline of the symmetrical triangle around $415 and the multi-month uptrend line near $390.
Shares of Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) closed at a record high on Monday, buoyed by gains in the conglomerate’s major holdings, including Apple (AAPL), American Express (AXP), Chevron (CVX) and Occidental Petroleum (OXY). The company’s shares, which trade for about 23 times analysts’ full-year operating profit estimates, are typically viewed by investors as a gauge of the health of the U.S. economy because of its diversification across a wide range of industries.
Berkshire Hathaway shares rose 2.4% to close Monday at $434.42.
As the stock price rises towards all-time highs, we take a closer look at the technical indicators on Berkshire Hathaway’s weekly chart to identify important levels to watch.
Breakout from a Symmetrical Triangle
Berkshire shares have been on a consistent upward trend since bottoming out halfway between its 50-week and 200-week moving averages in early October of last year. More recently, the stock price broke out of a textbook symmetrical triangle, a chart pattern that signals a continuation of the current uptrend.
Importantly, the initial breakout from this pattern occurred on the highest weekly volume since late February, suggesting buying conviction behind the move. Additionally, the Relative Strength Index (RSI) is just below the overbought level, confirming strong momentum in the stock.
Keep an eye on these price levels as further gains are expected
Below, we’ll use two different technical analysis techniques to project short-term and long-term price objectives: These levels will help us determine the rough areas on the chart where Berkshire shares could rise and encounter resistance if the price continues its uptrend.
Short-term price targets
To forecast potential short-term price targets, you can use the measurement principle. This is done by calculating the distance between the two trendlines of a symmetrical triangle near their widest points and applying that amount to the breakout area. For example, adding $50 to $415 gives you a target of $465.
The story continues
Long-term price target
Investors can use a chart overlay of past price movements to infer long-term price objectives. This works by taking the uptrend bar pattern preceding the symmetrical triangle and applying it to the most recent swing low. In this case, we take the bullish bar pattern from October 2023 to February of this year and line it up with the April low. This indicates a possible upside objective of around $500.
Keep an eye on key retracement areas
Investors looking for a key pullback level should keep an eye on the $415 area, where Berkshire shares are likely to attract buying interest near the upper trendline of a symmetrical triangle. A more significant pullback could send the stock back to the multi-month upward trendline near the $390 mark, which is also close to the 50-week moving average.
Comments, opinions and analyses expressed on Investopedia are for informational purposes only. Please read our warranties and disclaimers for more information.
At the time of writing, the author does not hold any positions in any of the securities mentioned.
Read the original article on Investopedia.
