The world leader in the design, manufacture, and marketing of thermal imaging infrared cameras, FLIR Systems, Inc. (NASDAQ: FLIR) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern: FLIR’s daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. The base of the triangle generally acts as a good support level.
Daily Chart – FLIR
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#4 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating that the bulls are currently in control.
However, there are indications of a short-term correction for the stock, as the RSI is presently overbought and the CCI is above 200 and moving down in the daily chart.
#5 Unbroken uptrend: The weekly chart shows that the stock is in an unbroken uptrend as it has been forming higher highs and higher lows during the past several weeks.
Weekly Chart – FLIR
#6 Bullish Stochastic: As you can see from the weekly chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#7 High Volume bullish candle during breakout: The stock has formed a high volume bullish candle during the breakout from the ascending triangle pattern last week. This is a bullish sign.
#8 Price above MAs: The current stock price is above both 50-week as well as 200-week SMA. This indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of FLIR if the stock corrects to the breakout level of the ascending triangle pattern, at around $55.
TP: Our target prices are $65 and $75 in the next 4-6 months.
SL: To limit risk, place a stop loss at $51.80. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 18% to 37% in the next 4-6 months. For a risk of $3.20, the target rewards are $10 and $20. This is a nearly 1:3 and 1:6 risk-reward trade.
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 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 its sector.
Happy Trading!
Tara
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