The company engaged in developing, manufacturing and marketing diagnostics technology, Co-Diagnostics Inc. (NASDAQ: CODX) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock had recently formed a symmetrical triangle pattern. This pattern is shown as pink 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 line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – CODX
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control. The latest candle is also a Marubozu candle with no upper wicks or lower shadows. This is a bullish candle.
#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 Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 Bullish ADX: The ADX line has started to move up from below –DI and +DI lines.
The +DI line is also currently above –DI line. This indicates possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before resuming its upmove. CODX had taken support at its 38.2% retracement level before moving higher. This seems like a good support area for the stock.
Weekly Chart – CODX
#7 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart as well. This usually indicates bullishness.
#8 Bullish MACD: The MACD line (blue color) is above the MACD signal line (orange color) in the weekly chart as well, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of CODX if it trades above yesterday’s close, at a price of around $13.75.
TP: Our target prices are $17 and $22 in the next 4-6 months.
SL: To limit risk, place a stop loss at $11.55. Note that this stop loss is on a closing basis.
Our target potential upside is almost 24% to 60% in the next 4-6 months.
For a risk of $2.20, our target rewards are $3.25 and $8.25. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x 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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