The leading provider of products to the global aerospace, defense, consumer electronics, and semiconductor industries, Astronics Corporation (NASDAQ: ATRO) seems to be ready for an upmove in the near term as per its latest charts.
#1 Falling Wedge Pattern: The daily chart shows that the stock has been forming a falling wedge pattern during the past few weeks. This is marked in purple color in the daily chart. The stock is currently near the top of this falling wedge pattern. If the stock breaks out of the top of the falling wedge pattern, it can move higher in the near-term.
#2 MACD above Signal Line: The daily chart of ATRO shows that the MACD (light blue color) has crossed above the MACD signal line (orange color). A potential buy signal is generated when this happens and it usually indicates a bullish setup.
This is a bullish sign.
#4 Bullish Stochastic: The daily chart shows that the %K line (blue color) is currently above the %D line (orange color) in the stochastic.
This indicates a bullish bias.
#5 Flag Pattern: The stock was in a strong uptrend for the past several weeks.
Then the stock started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. This is marked in the weekly chart in orange color. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
#6 Fibonacci Level Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. ATRO had taken support at the 38.2% Fibonacci support level of the upmove, as seen in the weekly chart. This seems like a good point to bounce back from.
#7 Oversold %R: Currently, William’s %R indicator is moving up from below -80. This is a bullish sign.
In addition, the RSI is currently near 50 and moving up while the %K line is above the %D line in the stochastic in the weekly chart. These are all possible bullish signs.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the shares of at the current price of $35.78. The rest can be purchased if the stock corrects to the bottom of the falling wedge pattern, at around $32.00 to $32.50.
TP: Our target prices are $45 and $55 in the next 4-6 months.
SL: To limit risk, place a stop loss at $31.50. Note that this stop loss is on a closing basis.
Our target potential upside is 26% to 69% in the next 4-6 months.
- Entry at $32.50: For a risk of $1.00, our target rewards are $12.50 and $22.50. This is a 1:2 and 1:5 risk-reward trade.
- Entry at $35.78: For a risk of $4.28, our target rewards are $9.22 and $19.22. This is a 1:13 and 1:23 risk-reward trade.
In other words, this trade offers nearly 2x to 23x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in its sector.