Hewlett Packard Enterprise (NYSE:HPE) Shows Strong Breakout Potential with High Technical and Setup Quality Scores

Technical breakout strategies focus on identifying stocks with strong momentum that are consolidating before their next upward move. By using ChartMill’s Technical Rating and Setup Quality scores, investors can find stocks with good technical health and a high-probability consolidation pattern. This method helps traders answer two key questions: which stocks are ready for more gains, and when to enter for the best risk-reward balance.

Hewlett Packard Enterprise (NYSE:HPE) is currently a strong candidate for this breakout approach. The stock’s Technical Rating of 8 and Setup Quality score of 9 indicate a good mix of trend strength and consolidation structure.

Technical Strength: A Strong Base

The ChartMill Technical Rating looks at factors like relative strength, trend consistency, and moving average alignment. HPE’s score of 8 shows several positive traits:

• Upward Trends in All Timeframes: Both short-term and long-term trends are moving up, supporting the stock’s momentum.
• Bull Flag Pattern: The recent pullback after a strong rise suggests a possible continuation pattern, often seen as a good entry point.
• Moving Average Support: The stock is above its 20-day, 50-day, 100-day, and 200-day moving averages, all trending higher, a sign of steady buying interest.

While HPE’s relative strength beats 77% of the market, it ranks in the middle of its industry, Technology Hardware, Storage & Peripherals. However, its recent price action shows improving momentum.

Setup Quality: A Clear Consolidation

The Setup Quality score of 9 points to a well-defined consolidation phase, often a precursor to a breakout. Key details from the technical report include:

• Lower Volatility: The stock has been trading in a tighter range, suggesting less selling pressure and possible accumulation.
• Support and Resistance Levels: A clear support zone lies between $20.65 and $20.81, while resistance starts at $20.89. A move above this level could lead to more gains.
• Pocket Pivot Signal: Recent volume patterns show accumulation, with buying interest at key levels, a positive sign.

The setup suggests an entry point just above resistance at $20.95, with a stop-loss below support at $20.64. While the tight stop reflects the consolidation’s precision, traders can adjust risk based on their strategy.

Why This Matters for Breakout Traders

The combination of a high Technical Rating and Setup Quality fits the core ideas of breakout trading:

1. Trend Confirmation: A high Technical Rating ensures the stock is in a steady uptrend, reducing the chance of false breakouts.
2. Best Entry Timing: The Setup Quality highlights consolidation periods, offering a lower-risk entry before the next upward move.

For investors looking for more breakout candidates, the Technical Breakout Setups screen provides an updated list of stocks meeting these criteria.

Disclaimer: This analysis is for informational purposes only and should not be seen as investment advice. Always do your own research and consider risk management before trading.