The atrial fibrillation (Afib) solutions company that develops, manufactures and sells devices designed primarily for the surgical ablation of cardiac tissue and systems designed for the exclusion of the left atrial appendage, AtriCure Inc. (Nasdaq: ARTC) seem to be gearing up for a surge as per its latest charts.
#1 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
#2 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has broken out of a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move.
[hana-code-insert name=’adsense-article’ /]#3 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.
#4 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#5 Channel: The daily chart shows that the stock had formed a trend channel in the last few months.
Currently, the stock has broken out of this trend channel, which is a possible bullish sign.
#6 Flag Pattern: The weekly chart shows that the stock was in a strong uptrend after which it started consolidating and was in a narrowing range.
This is a classic flag pattern and is marked in the chart below in purple color. A flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
#7 Bullish RSI: The RSI is above 50 and moving up, which is a possible bullish sign.
#8 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart as well, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ARTC if the stock closes above the resistance level of $34.
TP: Our target prices are $38 and $45 in the next 3-6 months.
SL: To limit risk, place a stop loss at $31.60. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 12% to 32% in the next 3-6 months. For a risk of $2.40, the target rewards are $4.00 and $11.00. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x 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 symmetrical 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.
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