TENARIS SA-ADR (NYSE:TS) Shows Bull Flag Setup Ahead of Potential Breakout

For investors using a technical breakout strategy, the goal is to find stocks that are technically sound and ready for a possible price increase. This method frequently uses a filter for two main proprietary metrics: a high ChartMill Technical Rating to verify the stock is in a good uptrend, and a high ChartMill Setup Quality Rating to find periods of consolidation that might come before a breakout. Using these scores together, traders try to locate chances in leading stocks when they are gathering momentum for their next advance.

Our daily filter for these technical breakout setups recently highlighted TENARIS SA-ADR (NYSE:TS), a worldwide maker of steel pipe products mainly for the oil and gas industry. The stock's present technical picture indicates it could be creating a pattern of note for investors focused on momentum.

Technical Strength: A Firm Base

The first part of the breakout strategy is finding stocks with fundamental technical strength, measured by the ChartMill Technical Rating. A high rating here means a stock is in a verified uptrend over several periods, an important trait for a breakout candidate as it raises the chance that an upward move will continue.

Based on the detailed technical report, Tenaris receives a Technical Rating of 8 out of 10. This number is backed by a few good points:

• Trend Agreement: The long-term and short-term trends for TS are both rated as good. This agreement across periods shows steady buying interest.
• Moving Average Backing: The stock's price is above all its important simple moving averages (20, 50, 100, and 200-day), and each average is also rising. This layered backing is a standard mark of a sound uptrend.
• Performance vs. Market: While the wider S&P 500 is trading near highs, TS is performing in the higher section of its own 52-week range. It has done better than 69% of all stocks in the last year, placing it as a medium-to-strong performer in the total market.

This technical base is critical because breakouts from consolidation in low-rated stocks frequently do not work. The good rating for TS gives a positive setting for a possible breakout move.

Setup Quality: The Pause Before the Advance

While technical strength shows which stock could be a good candidate, the Setup Quality Rating deals with when to think about an entry. A high setup score signals a time of consolidation or tightening price movement, which often comes before a notable price change. This allows for a specific entry point and a sensible level to set a protective stop-loss order.

Tenaris shows a very good Setup Quality Rating of 9. The study indicates a standard "bull flag" pattern, where prices have retreated in a controlled way after a previous rise. Important parts of this high-grade setup are:

• Less Volatility: The report mentions "much lower volume" lately, which is normal and wanted during a positive pullback, indicating an absence of heavy selling.
• Defined Support and Resistance: The stock is now trading inside a clear range. A notable support area is found between $39.55 and $40.13, made by a mix of trendlines and moving averages. Directly above, a resistance area is between $40.31 and $41.29.
• Large Trader Activity: The study found positive action from big participants (tracked by the Effective Volume indicator) and a recent "Pocket Pivot" signal, both of which can be early indicators of buying before a breakout.

This narrow consolidation near the top of its recent range, together with sound fundamental support, makes a situation where a move above the nearby resistance could mark the restart of the earlier uptrend.

A Possible Trade Plan

From this technical and setup study, a typical breakout strategy would include placing a buy order above the noted resistance area, with a stop-loss order set below the main support zone. The automatic study proposes an entry point above $41.30, with an exit below $39.54 to control risk. This plan states the trade's risk (about 4.3% in this case) before entry, a basic rule of orderly technical trading.

It is key to recall that no setup assures a win. The noted support or resistance levels might not last, and wider market situations can always change individual stock patterns. This study is founded only on price movement and technical measures.

Locating Additional Breakout Chances

Tenaris is only one instance of the kind of chance this filtering method can find. The task of filtering for stocks with high Technical and Setup Ratings is ongoing, as market situations and individual stock patterns change every day.

For investors wanting to see the present list of possible breakout setups, you can view the live Technical Breakout Setups filter here.

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Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer or request to buy or sell any securities. The study uses technical data and automatic scoring models, which have limits. All investment choices carry risk, including the possible loss of the original amount invested. Investors should do their own research, think about their money situation and risk comfort, and talk with a qualified financial advisor before making any investment choices. Past results do not predict future outcomes.