The manufacturer of radio-frequency identification devices and software, IMPINJ Inc. (NASDAQ: PI) 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 had recently broken out of a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink color lines. The breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
Daily Chart – PI
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
#3 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#4 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a possible bullish bias.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX is rising from below both (+DI) and (-DI).
#6 IH&S Pattern Breakout: As you can see from the weekly chart, the stock has currently broken out of an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in orange color. An IH&S pattern is a strong bullish pattern and a breakout from this pattern indicates that the stock may move higher in the short term.
Weekly Chart – PI
#7 Bullish MACD: In the weekly chart as well, the MACD line is above the MACD signal line, indicating possible bullishness.
#8 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart as well, which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PI is if it corrects to the price of around $31. Alternatively, you can purchase the shares of PI if it trades above yesterday’s close of $34.80.
TP: Our target prices are $40 and $45 in the next 3-6 months.
SL: To limit risk, place a stop loss at $31.50 (for entry near $34.80) and $25.50 (for entry near $31.00). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 15% to 45% in the next 3-6 months.
- Entry near $31.00: For a risk of $5.50, the target rewards are $9.00 and $14.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $34.80: For a risk of $3.30, the target rewards are $5.20 and $10.20. 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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