The Illinois-based education company that operates several for-profit higher education institutions, Adtalem Global Education Inc. (NYSE: ATGE) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: ATGE’s daily chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The base of the triangle also generally acts a good support level.
Daily Chart – ATGE
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This implies that the bulls are still in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD above signal line: As you can see from the daily chart, the MACD line (blue color) is currently above the MACD signal line (orange color), indicating a 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 %K above %D in Stoch: In the daily chart, the %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Near support level: The weekly chart shows that the stock had broken out of a strong resistance level. This is marked as a pink dotted line in the chart below. This resistance would now act as a good support level. This seems like a good area for stock to surge higher.
Weekly Chart – ATGE
#7 MACD above signal line: In the weekly chart as well, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#8 Above MAs: In the weekly chart as well, the stock is trading above both the 50-week as well as 200-week SMA, indicating possible bullishness.
#9 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart as well. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ATGE at the current price of $50.20.
TP: Our target prices are $58 and $65 in the next 3-6 months.
SL: To limit risk, place a stop loss below $46.20. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 16% to 30% in the next 3 to 6 months.
For a risk of $4.00, the target rewards are $7.80 and $14.80. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending triangle breakout level. 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 its sector.
Happy trading!
Tara
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