The American worldwide manufacturer and marketer of lighting-class LEDs, lighting products and products for power, and radio frequency applications, Cree, Inc. (NASDAQ: CREE) show signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Uptrend Channel Support: The daily chart of CREE shows that the stock was trading within an uptrend channel for the past several months. This channel is marked on the daily chart in purple color. Currently, the stock has taken support at the bottom of the channel. Once the stock breaks out from this channel, it has the potential to move further up.
Daily Chart – CREE
#2 Above MA: The stock is currently trading above both its 50-day and 200-day SMA. This shows that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /] #3 MACD Cross 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.
#4 Bullish CCI: The CCI has moved up from overbought levels and is currently above zero and moving up.
This indicates possible bullishness.
#5 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Bullish Candle: The latest candle is a bullish candle and is marked in an orange ellipse in the daily chart. This is a positive sign.
#7 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 above its 50-week as well as 20-week SMA. This implies that the bulls are currently in control.
Weekly Chart – CREE
#8 Strong RSI: The RSI is above 50 and moving up. This is a bullish sign.
#9 Bullish CCI: The CCI is currently above zero and moving up. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of CREE at the current price of $48.11 and the rest if the stock closes above $52.
TP: Our target prices are $60 and $70 in the next 4-6 months.
SL: To limit risk, place a stop loss at $43.80 (for entry at $48.11) and at $49 (for entry at $52). Note that this stop loss is on a closing basis.
Our target potential upside is almost 15% to 45% in the next 4-6 months.
- Entry at $48.11: For a risk of $4.31, our target rewards are $11.89 and $21.89. This is a 1:3 and 1:5 risk-reward trade.
- Entry at $52.00: For a risk of $3.00, our target rewards are $8.00 and $18.00. This is a 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 consolidation area and the uptrend channel. 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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