The distributor of cryogenically preserved human tissues for cardiac and vascular transplant applications and medical devices developer company, Cryolife Inc. (NYSE: CRY) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Breakout: As you can see from the daily chart of CRY, the stock has been forming a falling wedge pattern for the past few months. This is marked as purple color lines. The stock has currently broken out of the falling wedge pattern after taking support at the bottom of the wedge. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – CRY
#2 RSI Strong: Relative strength index (RSI) is currently above 50. This indicates the strength of the current upmove.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#4 Price above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating that the bulls are presently in control.
#5 Fibonacci Support: Usually, after an up-move, stocks usually retraces to any of the key Fibonacci levels before surging back again.
CRY had taken support at the 50% Fibonacci support level of the upmove and later moved above the 61.8% level, as seen in the weekly chart.
This seems like a good area for a bounceback.
Weekly Chart – CRY
#6 Flag Breakout in Weekly Chart: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. Currently, the stock has broken out of the flag. 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 MACD above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#8 Oversold RSI Moving up: In the weekly chart, the Relative strength index (RSI) is currently moving up after reaching oversold levels. This indicates the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CRY at the current price of $30.26.
TP: Our target prices are $35 and $40 in the next 4-6 months.
SL: To limit risk, place a stop loss below $27.40. Note that the stop loss is on a closing basis.
Our target potential upside is 16% to 32% in the next 4-6 months. For a risk of $2.86, our first target reward is $4.74 and the second target reward is $9.74.This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge 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 the energy sector.
Happy Trading!
Tara
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