The company providing various insurance products in the United States and Europe. Its insurance products cover stolen or damaged property, and personal liability, Lemonade Inc. (NYSE: LMND) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Double Bottom Pattern Breakout: In the daily chart of LMND, we can see that the stock has currently broken out of a double bottom pattern. This pattern is marked in the chart in purple color. A double bottom pattern is a strong bullish pattern and a breakout from this pattern indicates that the stock may move higher in the short term.
Daily Chart – LMND
#2 Above MA: The stock is currently trading above its short-term moving average of 50-day SMA, indicating the overall bullishness of the stock.
#3 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). This indicates a possible bullish bias.
#4 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.
#5 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.
#6 Stock On An Uptrend: The weekly chart shows that the stock is currently on an uptrend as it has been forming higher highs and higher lows. This is a possible bullish indication.
Weekly Chart – LMND
#7 Bullish Stoch: The %K line (blue line) is currently above the %D line (orange line) of the stochastic in the weekly chart. This usually indicates bullishness.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart as well, indicating possible bullishness.
#9 Bullish Stoch: In the weekly chart as well, the +DI and the ADX lines are above the -DI line, indicating bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level of LMND is above yesterday’s close, which translates to a price of around $82.00.
TP: Our target prices are $90 and $100 in the next 3-6 months.
SL: To limit risk, place a stop loss at $77.00. Note that this stop loss is on a closing basis.
Our target potential upside is almost 10% to 22% in the next 3-6 months.
For a risk of $5.00, our target rewards are $8.00 and $18.00. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the double bottom 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