For technical investors aiming to find stocks ready for their next increase, a common method uses two main ideas: trend strength and entry timing. The aim is to locate stocks that are in clear uptrends and also moving in a narrow band, providing a defined and managed entry point for a possible upward move. This method removes stocks that are only recovering from lows and those that have already risen far and might be ready for a decline.
A real-world use of this method is the Technical Breakout Setups screen, which uses ChartMill's own ratings. It searches for stocks with a high Technical Rating (showing a firm, sound trend) and a high Setup Quality Rating (showing a formed, tight pattern). This pairing seeks to highlight chances in leading stocks as they rest before possibly continuing their rise.
Johnson Controls International (NYSE:JCI) now shows a picture that fits this breakout approach. The building technology and solutions company has been found on such searches, justifying a more detailed review from a technical viewpoint.
Technical Strength: The Basis of the Trend
The main screen for any breakout possibility is the condition of the basic trend. A stock needs to show continued strength over several periods to be seen as a leader, not a short-term fluctuation. Johnson Controls does well here, receiving a leading ChartMill Technical Rating of 9 out of 10.
A detailed review of the full technical report shows the foundations of this strength:
- Trend Agreement: Both the near-term and longer-term trends for JCI are marked as positive. This agreement is a strong sign, implying momentum is present across various investor periods.
- Moving Average Backing: The stock price is above all its main simple moving averages (20, 50, 100, and 200-day), and each average is also in a rising pattern. This layered, positive arrangement shows steady buying interest.
- Market and Industry Leadership: JCI is trading near its 52-week high and has done better than 97% of similar companies in the Building Products field over the last year. Its relative strength rating of 90.65 further proves it is a stronger performer than most of the total market.
This firm technical foundation is key for the breakout method because it raises the chance that a move above resistance will continue, not end soon. It answers the "which stock" question by verifying JCI is in a controlling uptrend.
Setup Quality: Finding the Entry Area
A firm trend by itself is not a signal to buy; entering after a big rise raises risk. The second part of the method focuses on timing, looking for a phase of tight price movement. Johnson Controls displays encouraging traits here too, with a Setup Quality Rating of 8.
The setup review shows JCI has been trading in a set band over the last month, between about $113 and $122.90. Lately, it has been checking the top limit of this band. Main points include:
- Tight Movement Near Highs: The stock is moving in a narrow range near the top of its recent band, which is frequently a positive sign showing sellers are not acting strongly even with the rise.
- Clear Resistance and Support: The technical report notes a set resistance area just above the present price, around $122.32 to $122.66. In contrast, a major support area exists below, from $116.12 to $120.65, made by a group of moving averages and trendlines.
- Formed Pattern: This price activity has made a possible breakout shape. A clear move above the $122.67 resistance level could mark the close of the tight phase and the start of a new rising stage.
This setup quality is important because it gives a clear plan for risk control. The nearby support area provides a reasonable place to set a protective stop-loss order, clearly setting the trade's risk before entry. It answers the "when to buy" question by marking a specific trigger level.
Trade Plan and Risk Points
From this technical and setup review, a sample trade plan appears. It is key to remember this is an example taken from the ratings, not a suggestion.
- Possible Entry: A buy stop order could be set just above the noted resistance at $122.67, waiting for the stock to confirm its breakout move.
- Possible Exit (Stop-Loss): A stop-loss order could be placed just below the main support area, around $116.80.
- Set Risk: This plan would cap the theoretical largest loss to about 4.8% on the trade.
The report also mentions a recent "Pocket Pivot" signal, a volume-based sign that can point to buying by bigger investors, giving another piece of positive detail to the present setup.
Summary
Johnson Controls International shows a strong example for technical investors using a breakout method. It joins a high-likelihood foundation—a stock in a firm uptrend and leading its field—with a clear, managed entry setup as it tests a set resistance level. The clear marking of support and resistance allows for exact trade planning and risk control.
For investors looking to find like chances, new possible breakout setups are found each day. You can view the present market search results using the Technical Breakout Setups screen.
Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The review is based on technical measures and past data, which are not promises of future results. All trading and investment choices include risk, including the possible loss of capital. Investors should do their own study and talk with a qualified financial advisor before making any investment choices.
