The U.S. television provider based in Meridian, Colorado, DISH Network Corp (NASDAQ: DISH) seems to be poised for a price surge according to its charts.
#1 Symmetrical Triangle Pattern breakout: The daily charts shows that a symmetrical triangle pattern has been formed for the stock. This is marked in pink color dotted lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern. This is a possible bullish sign.
#2 Channel Breakout: As you can see from the daily chart, the stock has been trading within a channel during the past few weeks. This is marked in the daily chart in purple color. Currently, the stock has broken out from the top end of the channel.[hana-code-insert name=’adsense-article’ /]A breakout from the channel typically causes the stock to move higher.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 %K above %D: The %K line of the stochastic is currently above the %D line, indicating possible bullishness.
#5 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend line.
This line is shown in purple color in the chart below. This is a possible bullish sign.
#6 Other Bullish indicators: The RSI, Stochastic, MACD, and CCI indicators are all bullish in the weekly chart and point to the possibility of an upmove.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can buy the shares of DISH in either of the two scenarios:
- If the stock closes above the resistance level of $34.00.
- If the stock corrects to the support level of $28.00, in which case it could be the final stages of an IH&S pattern.
TP: Our target prices are $34 and $40 (when entering near $28) and $40 and $45 (when entering near $34) in the next 4-6 months.
SL: To limit risk, place a stop loss at $26.40 (for entry near $28) and $31.00 (for entry near $34). Note that this stop loss is on a closing basis.
Our target potential upside is almost 18% to 43% in the next 4-6 months.
- Entry at $28: For a risk of $1.60, our target rewards are $6.00 and $12.00. This is a 1:4 and 1:8 risk-reward trade.
- Entry at $34: For a risk of $3.00, our target rewards are $6.00 and $11.00. This is a 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 8x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the downtrend 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.
Tara[hana-code-insert name=’oxford 2′ /]