The company that develops, manufactures, and markets innovative MRI compatible medical devices, Iradimed Corp (NASDAQ: IRMD) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Channel Breakout: The daily chart of IRMD shows that the stock was trading within a downtrend channel for the past few months. This channel is marked on the daily chart in pink color. Currently, the stock has broken out of the channel after taking support at the bottom of the channel multiple times. This seems like a possible bullish indication.
Daily Chart – IRMD
#2 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI). These point to a possible upmove in the near-term.
[hana-code-insert name=’adsense-article’ /]#3 Above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are currently in control.
#4 CCI moving up: The CCI indicator value has currently moved above 200 after reaching oversold levels.
This indicates possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again.
IRMD has currently taken support at the 38.2% Fibonacci support level as seen in the weekly chart. This seems like a good area for the stock to move upwards.
Weekly Chart – IRMD
#7 Bullish Stochastic: The %K line is currently above the %D line in the stochastic. This indicates possible bullishness.
#8 RSI Strong: Relative strength index (RSI) is currently above 50 after moving up from oversold levels in the weekly chart. This indicates the strength of the current upmove.
#9 MACD above Signal Line: In the weekly 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.
#10 Above MA: The stock is currently trading above its 200-week SMA, indicating that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can the shares of IRMD if it crosses above the resistance level of $25.60.
TP: Our target prices are $30 and $40 in the next 3-6 months.
SL: To limit risk, place a stop loss at $22.90. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 17% to 56% in the next 3-6 months.
For a risk of $2.70, our first target reward is $4.40 and the second target reward is $14.40. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel 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 new government rules or regulatory changes in its sector.
Happy Trading!
Tara
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