Aflac Ready to Fly Higher

• Posted by Greg Harmon
• on May 12th, 2016

The insurance sector has been a bright spot since January after a small pullback. One name that has been soaring is Aflac, $AFL. Rising from the pullback of December into the beginning of the year, it made a new all-time high over 69.50 at the end of April. Since then it has moved sideways. But it might be time for Aflac to spread its wings and fly higher.

The chart below shows that it made a Cup and Handle pattern that broke to the upside in the beginning of April. This gave a price objective to at least 73.30. From there it has been consolidating. This leaves $4 of upside to that objective. But it has also set up a Measured Move to 74.75 with this consolidation.

Momentum remains strong, with the RSI running flat well into the bullish zone while the MACD resets lower but also in positive territory. There are two indications of why now may be the time for the next leg up. The first is that the Bollinger Bands® are squeezed. This is often a precursor to a move. And the second is the rising 20 day SMA. This has acted as support and a place where price has bounced each time it was touched in this move higher. Earlier this week the price touched the 20 day SMA again.

Look for a break over 69.50 as a trigger to own and use the 68 level, at the bottom of consolidation as a stop loss level.

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