The US technology company that offers products and services on energy and water resource management, Itron, Inc. (NASDAQ: ITRI) seems to be getting ready for a price bump according to the charts.
Bullish Move – Chart Indications
#1 Channel Breakout: As you can see from the daily chart of ITRI, the stock was trading within a channel for the past several weeks. ITRI has typically taken support at the lower rail of the channel before bouncing back. The stock has currently broken out of the channel, which is a possible bullish sign.
Daily Chart – ITRI
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#4 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart. This typically indicates a bullish setup.
#5 Bullish Stoch: The %K line is presently about to move above the %D line in stochastic. This is a possible bullish sign.
#6 Double Bottom Pattern Breakout: The stock had formed a double bottom pattern (marked in pink color) and has currently broken out of it.
The stock is also trading above both 50-week and 200-week SMA. All these are possible bullish signs.
Weekly Chart – ITRI
#7 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of ITRI at the current price of $64.93. The rest can be purchased if the stock corrects to the breakout level of the channel at around $61.
TP: Our target prices are $70 and $75 in the next 3-6 months.
SL: To limit risk, place a stop loss below $58.60 (for entry near $61) and $62.10 (for entry near $64.93). Note that the stop loss is on a closing basis.
Our target potential upside is nearly 8% to 23% in the next 3-6 months.
- Entry near $61: For a risk of $2.40, our target rewards are $9.00 and $14.00. This is a 1:4 and 1:6 risk-reward trade.
- Entry near $64.93: For a risk of $2.83, our target rewards are $5.07 and $10.07. This is a 1:2 and 1:4 risk-reward trade.
In other words, this trade offers almost 2x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the current channel and goes below it. 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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