One of the leading technology innovator in sustainable plastic, Loop Industries Inc. (NASDAQ: LOOP) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Double Bottom Pattern: As seen from the daily chart, the stock had recently formed a double bottom pattern (marked in pink color). Once the stock breaks out of a bullish pattern like the double bottom pattern, it typically moves higher.
Daily Chart – LOOP
#2 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.
[hana-code-insert name=’adsense-article’ /]#3 MACD Above Signal Line: The MACD line (blue color) is currently above the MACD signal line (blue color) in the daily chart.
This is a possible bullish sign.
#4 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.
#5 Bullish ADX: The ADX line has currently moved up from below –DI and +DI lines.
The +DI and ADX lines are also currently above –DI line. This indicates possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has recently broken out of a short term downtrend. This downtrend line is marked in pink color in the weekly chart. This is a possible bullish sign.
Weekly Chart – LOOP
#7 Price above MA: The stock is currently trading above its 50-week SMA, indicating that the bulls are in control.
#8 Strong Stoch: The stochastic is currently moving up and the %K line is currently above the %D line in the weekly chart. This usually indicates bullishness.
#9 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating a possible bullish bias for the stock.
#10 Bullish ADX and DI: The weekly chart shows that the ADX line is moving up from below –DI and +DI lines. The +DI and ADX lines are also currently above –DI line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for LOOP is above the high of the candle that was formed on 14 February 2019. This translates to a price of around $12.50.
TP: Our target prices are $18 and $24 in the next 4-6 months.
SL: To limit risk, place a stop loss below $9.90. Note that the stop loss is on a closing basis.
Our target potential upside is 44% to 92% in the next 4-6 months.
For a risk of $2.60, our target rewards are $5.50 and $11.50. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the double bottom 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 sector.
Happy Trading!
Tara
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