The medical device company that develops and commercializes products using a proprietary rapid acoustic pulse technology platform, Soliton Inc. (NASDAQ: SOLY) seems to be poised for a price surge according to its charts.
Bullish Indications
#1 Symmetrical Triangle Pattern breakout: The daily charts shows that the stock was forming a symmetrical triangle pattern during the past several weeks.
This pattern is marked in purple color lines.A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers.
Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.
Currently, the stock has broken out of the symmetrical triangle pattern. This is a possible bullish sign.
Daily Chart – SOLY
#2 Price above MAs: The daily chart shows that the stock is currently above both 50-day and 200-day SMA. This is also a possible bullish sign.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#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 bullishness.
#5 Bullish ADX and DI: The daily chart shows that the ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line. This indicates possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend and started to move higher. The downtrend line is marked as a blue dotted line. This is a possible bullish sign.
Weekly Chart – SOLY
#7 Bullish Stochastic: The %K line is above the %D line in the weekly chart of SOLY. This indicates that the stock may move higher soon.
#8 MACD above Signal Line: As you can see from the weekly chart, the MACD line (blue color) is currently above the MACD signal line (orange color) on the weekly chart as well. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for SOLY is above the price of around $15.
TP: Our target prices are $20 and $24 in the next 4-6 months.
SL: To limit risk, place a stop loss at $11.60. Note that this stop loss is on a closing basis.
Our target potential upside is almost 33% to 60% in the next 4-6 months.
For a risk of $3.40, our target rewards are $5.00 and $9.00. This is an almost 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 with high volume from the symmetrical triangle 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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