The natural gas transmission company, EQT Midstream Partners LP (NYSE: EQM) seem to be poised for a price surge as per its latest charts.
#1 Falling Wedge Breakout: As you can see from the daily chart, the stock has been trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in purple color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
There is also a CCI-Price positive divergence on the daily chart.
The CCI made a higher low while the price made a lower low.
This is marked on the chart as pink dotted lines.
This indicates that the selling pressure is reducing and the stock may move higher.
#4 Strong RSI: The daily chart shows that RSI is above 50 and moving up, indicating strength.
#5 %K above %D: The %K line is above the %D line in the stochastic. This is a bullish sign.
#6 Downtrend Broken in Weekly Chart: As evident from the weekly chart, the stock was in a downtrend since past few weeks. The stock then formed a Doji candlestick after which a strong bullish candle is being formed this week. This indicates a strong bullish reversal.
#7 Strong Stochastic: The weekly chart shows that the stochastic is oversold. The %K line is also above the %D line. All these indicate that an upmove may be imminent.
#8 Bullish Divergence in Stochastic: There is a bullish divergence between stochastic and price, which is marked by pink dotted lines in the daily chart. This is also a bullish sign.
#9 CCI moving up: The CCI is moving up from below -100 and is currently above zero, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for EQM is at the current price of $55.59.
TP: Our target prices are $63 and $75 in the next 3-6 months.
SL: To limit risk, place stop-loss at $52.80. Note that the stop-loss is on a closing basis.
Our target potential upside is 13% to 35% in the next 4 months.
For a risk of $2.79, our target rewards are $7.41 and $19.41. This is a 1:3 and 1:7 risk-reward trade.
In other words, this trade offers nearly 3x to 7x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern with a high volume. 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 the sector.
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