The premier global provider of satellite communication solutions headquartered in Englewood, Colorado, Echostar Corporation (NASDAQ: SATS) seems to be poised for a price surge as per its latest charts.
#1 Double Bottom: The daily chart of SATS shows that a double bottom is currently being formed for the stock. This is marked in the chart below in purple color. A Double bottom pattern is a bullish reversal pattern, indicating that the stock could possibly move upwards.
There is also a smaller double bottom pattern being formed in the daily chart during the past few days. This is marked in orange color in the chart below.
#3 Unbroken Uptrend in Weekly Chart: As evident from the weekly chart, the stock is in an uptrend as it has been making higher highs and higher lows for the past several months.
The stock is also trading above the 200-week SMA.
This implies that the bulls are still in control.
#4 Oversold RSI: The RSI in the weekly chart is currently near the oversold levels, indicating that the price may reverse to the upside soon.
#5 Fibonacci Bounceback: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. In the weekly chart, the stock had bounced back from the 61.8% Fibonacci support level multiple times. This level seems like a good support level for the stock. Currently, the stock has bounced up from the 61.8% retracement level and seems to be poised to move up.
#6 Double Bottom Pattern: A double bottom pattern is currently being formed in the weekly chart of SATS. This is also a possible bullish sign.
#7 Demand Area: On the week ending April 2, 2018, the stock formed a strong bullish candle with very high volumes. This is marked in the chart in orange color. This demand area is currently being retested this week. The stock has not yet broken down, showing that this is a good support area.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of SATS at the current price level of $52.26.
TP: Our target prices are $62 and $75 in the next 2-4 months.
SL: To limit risk, place stop-loss at $49.50. Note that stop loss is on a closing basis.
Our target potential upside is 19% to 43% in the next 2-4 months. For a risk of $2.76, our target rewards are $9.74 and $22.74. This is a 1:3 and 1:8 risk-reward trade.
In other words, this trade offers nearly 3x to 8x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the double bottom 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.