The company engaged in the exploration, development, and production of oil and natural gas on properties, Goodrich Petroleum Corp (NYSE: GDP) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock was forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level. Currently, the stock has broken out of an ascending triangle pattern, which is a possible bullish sign.
Daily Chart – GDP
#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.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than (-DI), and ADX is rising from below both (+DI) and (-DI).
#4 Bullish Stoch: The daily chart shows that the %K line is above the %D line of the stochastic, indicating possible bullishness.
#5 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart. This typically indicates a bullish setup.
#6 Above Support Area: The weekly chart shows that the stock is trading above a strong support area. This is marked as a green color line. This is a possible bullish indication.
Weekly Chart – GDP
#7 Broken Downtrend: As seen from the weekly chart, the stock has currently broken out of a short-term downtrend and has started moving higher. The stock is also above its 50-week SMA. All these indicate possible bullishness.
#8 Bullish ADX and DI: In the weekly chart as well, the +DI line is currently above the -DI line, while the ADX line is moving higher. This is a possible bullish sign.
#9 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating overall bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of GDP above the price of around $10.70.
TP: Our target prices are $14 and $18 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $8.50. Note that the stop loss is on a closing basis.
Our target potential upside is 31% to 68% in the next 4-6 months.
For a risk of $2.20, the target rewards are $3.30 and $7.30. 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 ascending 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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