The California-based firm that licenses technology and intellectual property in areas such as mobile computing, communications, memory and data storage, and three-dimensional integrated circuit technologies, Xperi Holding Corp (NASDAQ: XPER) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern which is a possible bullish sign. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as pink color lines.
Daily Chart – XPER
#2 Trading above MAs: The price is currently above its short-term moving average of 50-day SMA as well as the longer-time moving average of 200-day SMA. This implies a possible bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX line is also currently above the –DI line. This indicates possible bullishness.
#5 Ascending Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in orange color lines. A breakout from this pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
#6 Double Bottom Pattern: The weekly chart shows that the stock is currently forming a double bottom pattern, which is marked in orange color. A double bottom is a bullish pattern and once a breakout from the pattern occurs, the stock would typically surge higher.
Weekly Chart – XPER
#7 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 Broken Downtrend: The weekly chart shows that the stock has broken out of a short-term downtrend, which is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for XPER is above yesterday’s high. This translates to a price of around $19.00.
TP: Our target prices are $25 and $32 in the next 3-6 months.
SL: To limit risk, place a stop loss at $15.00. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 32% to 68% in the next 3-6 months.
For a risk of $4.00, the target rewards are $6.00 and $13.00. This is a nearly 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 its sector.
Happy Trading!
— Tara
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