The Texas-based biotechnology company which develops, manufactures, and markets proprietary biological testing technologies with applications in life-sciences, Luminex Corporation (NASDAQ: LMNX) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart of LMNX, the stock was forming a falling wedge pattern for the past several weeks. This pattern is marked in pink color lines. The stock had taken support at the bottom of the wedge before bouncing back multiple times. The stock is currently near the upper rail of the falling wedge pattern. Once the pattern breakout happens, it usually preludes a possible bullish move.
#2 Price above MA: The stock is currently above 50-day SMA, indicating that the bulls have currently gained control.
This indicates a possible bullish setup.
#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 RSI: The RSI is currently above 50 and moving up in the daily chart, indicating possible bullishness.
#6 Support near consolidation area: The weekly chart shows that the stock had broken out of a consolidation area.
This consolidation area is marked as a pink rectangle. The stock had recently corrected and reached near the consolidation area again. It had taken support at that area and started its current upmove. This is a possible bullish sign.
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for LMNX is above the resistance level of around $22.
TP: Our target prices are $28 and $35 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $19.25. Note that the stop loss is on a closing basis.
Our target potential upside is 27% to 59% in the next 3-6 months.
For a risk of $2.75, our target rewards are $6.00 and $13.00. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x 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 sector.