The American online advertising technology firm based in Los Angeles, California, Magnite Inc. (NASDAQ: MGNI) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Uptrend Channel Breakout: As you can see from the daily chart, the stock has been trading within an uptrend channel during the past few months. This is marked in the daily chart in pink color. Currently, the stock has broken out of the channel. Once the stock breaks out from an uptrend channel, it has the potential to move further up.
Daily Chart – MGNI
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA. This is a possible bullish sign.
#3 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 possible bullishness.
#4 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color). This typically indicates a bullish setup.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as an orange dotted line. The stock is also trading above its 50-week SMA, indicating that the bulls are currently in control. This looks like a good area for the stock to move higher.
Weekly Chart – MGNI
#7 Bullish MACD: The MACD (light blue color) is currently above the MACD signal line (orange color) in the weekly chart as well, indicating possible bullishness.
#8 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started to move up from below both (+DI) and (-DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of MGNI if it trades above yesterday’s close. This translates to a price above $14.30.
TP: Our target prices are $18 and $21 in the next 4-6 months.
SL: To limit risk, place stop-loss at $11.90. Note that the stop-loss is on a closing basis.
Our target potential upside is 26% to 47% in the next 4 to 6 months.
For a risk of $2.40, our target rewards are $3.70 and $6.70. 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 from the uptrend channel breakout level with a high volume. 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