The medical device company headquartered in Audubon, Pennsylvania that focuses on the design, development, and commercialization of products that enable surgeons to promote healing in patients with musculoskeletal disorders, Globus Medical Inc. (NYSE: GMED) shows signs of an upcoming price surge according to its latest charts.
#1 Double Bottom Pattern Breakout: In the daily chart of GMED, we can see that the stock has currently broken out of a double bottom pattern. This pattern is marked in the chart in pink color. A double bottom pattern is a strong bullish pattern and indicates that the stock may move higher in the short term.
#2 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.
This indicates a possible bullish bias.
#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 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before resuming its upmove.
GMED had taken support at its 50% retracement level before moving higher to reach near the 78.6% Fibonacci level as seen in the weekly chart. Once above the 78.6% level, it seems like a good support area for the stock.
#6 Bullish RSI: The RSI is currently above 50 and moving up, indicating the strength of the current upmove. The stock is also above its 50-week as well as 200-week SMA, indicating that the bulls are still in control.
#7 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart. This usually indicates bullishness.
#8 Bullish MACD: The MACD line (blue color) is above the MACD signal line (orange color) in the weekly chart as well, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level of GMED is above a close of $50.50.
TP: Our target prices are $60 and $70 in the next 3-6 months.
SL: To limit risk, place a stop loss at $45.70. Note that this stop loss is on a closing basis.
Our target potential upside is almost 18% to 39% in the next 3-6 months.
For a risk of $4.80, our target rewards are $9.50 and $19.50. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the double bottom pattern. 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.
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