Take home this hot stock: Technician

They say home is where the heart is, but in the eyes of one technician it's also where you can find big profits.

The S&P 500 Homebuilders ETF, the XHB, hit a new multiyear high this week after retail behemoth Home Depot reported better-than-expected sales and lifted guidance on Tuesday. Shares of the home improvement giant are now up 17 percent this year, and chart guru Rich Ross sees even more gains to come.

Read MoreHousing recovery drives Home Depot sales beat

"When I look at a chart of Home Depot I see there is still upside from here," Ross said Tuesday on CNBC's "Trading Nation." Home Depot stock hit an all-time high this week on the back of its earnings beat.

According to Ross' charts, there are two strong areas of support that could act as a catalyst for the next leg up for Home Depot. "The first thing I see on this chart is this beautiful rounded base of support that has formed in the past six months, which also coincides with the 100-day moving average," he said. "I think Home Depot could get up to $129." That's a 5 percent rally for the stock, which traded near $122.60 on Wednesday.

To get to his price target, Ross simply measured the height of the basing pattern, which is roughly $11, and added it to the neckline at $118. "With the stock trading around $122, we'd be buying the stock right here."

A move to $129 for Home Depot is roughly in line with Wall Street estimates. Of the 29 analysts who cover the stock, the average price target is $129.71 with an "overweight" rating.

Disclaimer

Want to be a part of the Trading Nation? If you'd like to call into our live Wednesday show, email your name, number and a question to TradingNation@cnbc.com.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect