Bullish Indications
#1 Hammer: The latest candlestick in the daily chart of SPTN is a hammer (green ellipse). This is usually considered as a sign of a reversal of the downward trend.
#2 Ascending triangle pattern support: The daily chart of SpartanNash shows that the stock had taken support at the bottom of the Ascending Triangle pattern and then started its upward move. An Ascending Triangle pattern is a bullish pattern and is marked in the chart in pink lines. The stock has previously taken support near the bottom of ascending triangle pattern before moving higher again.
Daily Chart – SPTN
#3 RSI moving up: In the daily chart, the RSI was near oversold levels and is now moving upwards. This indicates a possible upmove.
#4 MACD near crossover: The MACD (light blue color) is currently poised to cross above the MACD signal line (orange color). Once this bullish crossover occurs, a rally to the top of the ascending triangle is quite likely.
Weekly Chart – SPTN
#5 Uptrend unbroken: The weekly chart shows that the stock’s uptrend is still unbroken as the price has been making higher highs and higher lows for the past few years.
#6 Hammer: The past two candles on the weekly chart are hammers, indicating a possible reversal from the prevailing downtrend.
#7 CCI near oversold: The price crossing below the oversold threshold of CCI is usually a sign of bullish reversal. Currently, the CCI is near -97 and moving down. Once CCI crosses below -100, it usually indicates an ideal setup for a bounce back.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level is when SPTN breaks out of the ascending triangle pattern at $27. But if you want a speedier entry, you can buy half the intended between the price of $18.63 and $22.69 (current price) and follow a strict stop loss.
TP: Our target prices are based on the ascending triangle pattern breakout. The first TP is $35 and the second TP is $40.
SL: To limit risk, place a stop loss at $17.65 (for speedier entry) and $24.50 (when entering after breakout). Note that this stop loss is on a closing basis.
The target potential upside for this trade is nearly 30% to 76% in the next 3-5 months.
- Speedier Entry at $22.69: For a risk of $5.04, the target rewards are $12.31 and $17.31. This is a nearly 1:2 and 1:3 risk-reward trade, which means that this trade offers nearly 2x to 3x more potential upside than downside.
- Entry at $27: For a risk of $2.5, the target rewards are $8 and $13. This is a nearly 1:3 and 1:5 risk-reward trade, which means that this trade offers nearly 3x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the long-term uptrend and ascending triangle 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.
Happy Trading!
Tara
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