The company that provides both regulated and unregulated telecommunications services to end user customers and other telecommunications providers in Virginia, West Virginia, central Pennsylvania, western Maryland, and portions of Kentucky and Ohio, Shenandoah Telecommunications Company (NASDAQ: SHEN) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart of SHEN shows that the stock has been trading within a downtrend channel for the past few months. This channel is marked in the daily chart in pink color. Currently, the stock has broken out of this channel, indicating that it has the potential to surge ahead.
Daily Chart – SHEN
#2 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.
#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 Strong Stoch: The stochastic is currently moving up and the %K line is currently above the %D line.
This usually indicates bullishness.
#6 Fibonacci Support: The weekly chart shows that the stock was on an uptrend after which it has been correcting.
It is now moving up after taking support near the 23.6% Fibonacci retracement level of this move. Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before resuming its upmove. So, this 23.6% retracement level seems like a good support area.
Weekly Chart – SHEN
#7 Bullish MACD: The MACD line is above the signal line in the weekly chart as well, indicating a possible bullish bias.
#8 Bullish ADX: The weekly chart shows that the ADX line has moved up from below –DI and +DI lines. The +DI line is also currently above –DI line and the ADX line. All these indicate possible bullishness.
#9 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of SHEN if it opens above yesterday’s close. This translates to a price above $40.
TP: Our target prices are $45 and $50 in the next 3-6 months.
SL: To limit risk, place a stop loss at $36.70. Note that this stop loss is on a closing basis.
Our target potential upside is almost 13% to 25% in the next 3-6 months.
For a risk of $3.30, our target rewards are $5.00 and $10.00. This is almost 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x rewards when compared to risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel. 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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