I can't help notice that the setup in Union Pacific is oddly familiar to how it looked in 2010 following the '08-'09 bear market. The rally following that bottom reversal was nearly a 4x gain from the March 2010 buy signal. It appears a similar setup is in place once again. This doesn't mean it will rally to $500, but to ignore the pattern may be costly.
Monthly chart '07-'10
with MACD and Fibo of pullback
Monthly chart '15-'17
with MACD and Fibo of pullback
In both cases the stock endured a sizable correction for multiple months. As UNP began to recover to the 61.8% Fibo retracement of the correction the stock put in a few month base and then broke above the Golden Ratio line. When that resistance is broken I find it becomes a high probability trade for the stock to drift toward the prior high. In UNP's case it tends to trade back to the correction highs and then substantially higher. This pattern has repeated multiple times since the stock has been trading.
Something I look for when determining risk/reward is the position of the long-term MACD. Certain patterns in the indicator are more favorable to large rallies than others. Identifying when these patterns are in place can improve accuracy and returns over time. Just as food for thought, compare in both cases above how the Monthly MACD was positioned just prior to the large correction and how it then looked once the new buy signal took place. The posture of momentum looks very different currently to how it looked at the top before rolling over. This is what we try to identify, are we buying a stock closer to its top or closer to its bottom? I think the case is quite clear here.
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