The healthcare technology company in the field of medication safety in the United States, Tabula Rasa HealthCare Inc. (NASDAQ: TRHC) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Channel Breakout: The daily chart of TRHC shows that the stock was trading within a channel for the past few months. This channel is marked on the daily chart in purple color. Currently, the stock has broken out of the channel and started moving higher. This seems like a possible bullish indication.
Daily Chart – THRC
#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 to rise from below both (+DI) and (-DI). These point to a possible upmove in the near-term.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color).
This is a possible bullish setup.
#4 Above MAs: The stock is currently trading above both the short-term moving average of 50-day as well as the longer-term moving average of 200-day SMA.
This indicates that the bulls are currently in control.
#5 Above Gap Support: The daily chart shows that the stock is currently trading above gap support.
This is marked as an orange dotted line. This seems like a good area for the stock to move higher.
#6 IH&S Pattern Breakout: The weekly chart shows that the stock has been forming an inverted head and shoulders pattern. This pattern is marked in pink color. A breakout from a bullish pattern like IH&S pattern indicates the possibility of an upmove. Currently, the stock has broken out of the IH&S pattern, indicating possible bullishness.
Weekly Chart – THRC
#7 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating 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.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of TRHC if it trades above the previous close. This translates to a price of around $54.90.
TP: Our target prices are $65 and $75 in the next 3-6 months.
SL: To limit risk, place a stop loss at $48.90. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 18% to 37% in the next 3-6 months.
For a risk of $6.00, our first target reward is $10.10 and the second target reward is $20.10. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel breakout level 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 new government rules or regulatory changes in its sector.
Happy Trading!
Tara
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