The popular global technology company that focuses on business-to-business and information technology capabilities for enterprises, Insight Enterprises, Inc. (NASDAQ: NSIT) seems poised for a price surge after a small correction according to its latest charts.
[hana-code-insert name=’adsense-article’ /]#1 Falling Wedge Bottom Support: The daily chart of NSIT shows that the stock has been trading within a falling wedge pattern for the past few months.
This is marked in purple color in the daily chart below. Currently, the stock has taken support near the bottom of this falling wedge pattern.
This usually acts as 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 in the near term.
#2 Oversold RSI in Daily: The daily chart of NSIT shows that RSI is oversold. This shows that the selling momentum is weakening and the trend reversal might be around the corner. This is yet another bullish sign.
#3 Flag Pattern: As seen from the weekly chart below, the stock was in a strong uptrend from February 2016. Then the stock started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
#4 Weekly Support at Fibonacci Level: The weekly chart of NSIT shows that the stock had been on an uptrend from February 2016 and formed a top in May 2017. Since then, the stock has been correcting. It is now near the 38.2% Fibonacci retracement level of this move from $18.23 to $53.05. Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. So, this 38.2% retracement level seems like a good support area.
#5 Long-term support level: As seen from the weekly chart, there is a long-term support level for the stock which is marked in green dotted line. This is also a good point for the stock price to bounce back from.
#7 RSI Nearing Oversold: From the weekly chart of Insight Enterprises Inc., it is evident that the RSI is near oversold levels.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of NSIT between the price of $31.05 and $32.40.
TP: Our first target price is $44 in 4 months and the second target price is $54 in 6 months based on the falling wedge pattern.
SL: To limit risk, place a stop loss at $28.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 36% to 74% in the next 4-6 months.
- When entering at $31.05, our target potential upside is almost 42% to 74%. For a risk of $2.55, our first target reward is $12.95 and the second target reward is $22.95. In other words, this trade offers nearly 5x to 9x more potential upside than downside.
- When entering at $32.40, our target potential upside is almost 36% to 67%. For a risk of $3.90, our first target reward is $11.60 and the second target reward is $21.60. In other words, this trade offers nearly 3x to 6x 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=’investorplace-article2′ /]