One of the largest operators of business-to-business trade shows in the U.S, Emerald Expositions Events Inc. (NYSE: EEX) seems to be ready for an upmove in the near term as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern: The daily chart shows that the stock has been forming a falling wedge pattern during the past few months. This is marked in purple color in the daily chart. A falling wedge is a bullish pattern. If the stock breaks out of the top of the falling wedge pattern, it may move higher in the near-term.
Daily Chart – EEX
#2 Oversold RSI: The daily chart shows that the RSI is currently moving upwards from oversold levels. This is a bullish sign.
[hana-code-insert name=’adsense-article’ /] #3 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.The stochastic is also rising up from below 20, which is yet another bullish sign.
#4 RSI -Price Bullish Divergence: There is a bullish divergence between RSI and price in both daily as well as the weekly chart.
While the price formed a lower low, the RSI formed to a higher low.
This is marked as pink dotted lines in the daily and weekly chart. This is a possible bullish sign.
Weekly Chart – EEX
#5 High Volume Reversal Candle: There is a high volume reversal candle being formed in the weekly chart. This is marked in orange color ellipse. This high volume candle indicates that the selling pressure is reducing and the price may reverse to upside soon.
#6 Oversold CCI Moving Up: The CCI was oversold and below -200. It is now above -100 and currently moving up in the weekly chart, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level is if the price of EEX breaks out of the Falling Wedge pattern at around $15.80.
TP: Our target prices are $25 and $30 in the next 4-6 months.
Note: There is a resistance level at around $19.11 at the 200-day SMA level. You may exit half your holdings in case the stock is unable to cross above $19.20 after multiple attempts.
SL: To limit risk, place a stop loss at $13.80. Note that this stop loss is on a closing basis.
Our target potential upside is almost 58% to 90% in the next 4-6 months. For a risk of $2.00, our target rewards are $9.20 and $14.20. This is a nearly 1:5 and 1:7 risk-reward trade.
In other words, this trade offers nearly 5x to 7x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling edge pattern with 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 its sector.
Happy Trading!
Tara
[hana-code-insert name=’Stans Melt Up 2′ /]