Popular American technology provider and manufacturer of remote controls, IoT devices, and home sensor, Universal Electronics Inc. (NASDAQ: UEIC) seem poised for a price surge according to its latest charts.
#1 Falling Wedge Support: The daily chart of UEIC shows that the stock has been trading within a falling wedge pattern for almost a year. This is marked in dark blue color in the daily chart below. Currently, the stock has taken support near the bottom of this falling wedge pattern. This is a good point for the stock to bounce back from. The price can potentially reach the top of the falling wedge pattern and breakout of the pattern.
#2 Hammer Candlestick: As you can see from the daily chart, the latest candle is a Hammer. This indicates a possible bullish reversal.
[hana-code-insert name=’adsense-article’ /]#3 RSI near oversold levels: The daily chart of UEIC shows that RSI is nearing oversold levels.
This shows that the selling momentum is weakening and the reversal might be around the corner.
This is yet another bullish sign.
#4 Weekly Support at Fibonacci Level: The weekly chart of UEIC shows that the stock had been on an uptrend from $12.46 in June 2012 and formed a top at $80.42 around August 15, 2016.
Since then, the stock has been correcting. It has now taken support at the 50% Fibonacci retracement level of this move from $12.46 to $80.42. Typically, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. So, this 50% retracement level is a good support area.
#5 MACD Near crossover: In the weekly chart, the MACD (light blue color) is currently just below the MACD signal line (orange color) and starting to move upwards. A crossover seems imminent. A potential buy signal is generated when the MACD line crosses above the MACD Signal Line. This indicates a possible bullish setup.
#6 Overall trend still bullish: From the weekly chart of Universal Electronics Inc., it is clearly evident that the stock is still on an uptrend. This is because the price has been making higher highs and higher lows.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of UEIC between the price of $44.60 and $46.10.
TP: Our first target price is $55 in 4 months and the second target price is $65 in 6 months based on the falling wedge pattern.
SL: To limit risk, place a stop loss at $42.80. Note that this stop loss is on a closing basis.
Our target potential upside is almost 19% to 46% in the next 4-6 months.
- When entering at $44.60
- TP#1: Our target potential upside is almost 23%. For a risk of $1.80, our target reward is $10.4. In other words, this trade offers nearly 6x more potential upside than downside.
- TP#2: Our target potential upside is almost 46%. For a risk of $1.80, our target reward is $20.40. In other words, this trade offers nearly 11x more potential upside than downside.
- When entering at $46.10
- TP#1: Our target potential upside is almost 19%. For a risk of $3.30, our target reward is $8.90. In other words, this trade offers nearly 3x more potential upside than downside.
- TP#2: Our target potential upside is almost 41%. For a risk of $3.30, our target reward is $18.90. In other words, this trade offers nearly 6x more potential upside than downside.
In other words, this trade offers nearly 3x to 11X more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume 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 the sector.
Tara[hana-code-insert name=’MMPress’ /]