The San Francisco-based software company known for its namesake SaaS platform, Anaplan Inc. (NYSE: PLAN) seems to be poised for a price surge according to its charts.
Bullish Indications
#1 Flag Pattern: As seen from the daily chart of PLAN, the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in orange color in the chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
Daily Chart – PLAN
#2 Double Bottom Pattern: The stock is currently forming a double bottom pattern in the daily chart. This is marked in the chart in pink color. A double bottom is a bullish reversal pattern and the breakout from it would indicate that the stock could move upwards.
[hana-code-insert name=’adsense-article’ /]#3 Bullish RSI: The RSI had started moving up after reaching near oversold levels and is currently near 50, indicating that the price may move higher soon.
#4 MACD above Signal Line: In the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#5 Price above MA: The price is currently above the longer-term moving average of 200-day SMA.
This is a possible bullish sign.
#6 Fibonacci Support: As seen in the weekly chart, the stock was on an uptrend and has been correcting after forming a top.
Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before resuming its upmove. The stock had taken support at the 61.8% Fibonacci retracement level before surging back again. This seems like a good area for a bounceback.
Weekly Chart – PLAN
#7 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.
#8 Uptrend Unbroken: As you can see from the weekly chart, the stock has been forming higher highs and higher lows for the past few weeks, indicating that the uptrend is still intact.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for PLAN is above the breakout level of the double bottom pattern at around $54.50.
TP: Our first prices are $60 and $70 in the next 4-6 months.
SL: To limit risk, place a stop loss at $51.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 10% to 28% in the next 4-6 months.
For a risk of $3.20, our target rewards are $5.50 and $15.50. 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 with high volume from the flag 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.
Happy Trading!
Tara
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