The cybersecurity company headquartered in Milpitas, California that provides hardware, software, and services to investigate cybersecurity attacks, protect against malicious software, and analyze IT security risks; FireEye Inc. (NASDAQ: FEYE) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock has been forming a falling wedge pattern for the past few months. This is marked as pink 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 – FEYE
#2 RSI Strong: Relative strength index (RSI) is currently above 50 and moving up. This indicates the strength of the current upmove.
[hana-code-insert name=’adsense-article’ /]#3 Price above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are presently gaining control.
#4 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 as a potential buy signal.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and ADX and (+DI) are above (-DI).
ADX has also started moving up from below (-DI) and (+DI) and has currently crossed (-DI).
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. The downtrend line is marked in pink color. This is a possible bullish sign.
Weekly Chart – FEYE
#7 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
#8 MACD above Signal Line: As you can see from the weekly chart as well, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of FEYE if the stock closes above $16.
TP: Our target prices are $20 and $25 in the next 4-6 months.
SL: To limit risk, place a stop loss below $14.80. Note that the stop loss is on a closing basis.
Our target potential upside is 25% to 56% in the next 4-6 months.
For a risk of $1.20, our first target reward is $4.00 and the second target reward is $9.00. This is a nearly 1:3 and 1:8 risk-reward trade.
In other words, this trade offers 3x to 8x 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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