The company that operates as a business-to-business supplier of internet gambling software-as-a-service solutions to online casino gaming and online sports betting applications in the United States, Gan Ltd (NASDAQ: GAN) seems poised for a price surge according to its latest charts. This stock was also a part of our watchlist for this week.
Bullish Indications
#1Breakout from consolidation area: The daily chart shows that the stock was trading within a range for the past several days. This indicates consolidation. The consolidation area is marked as a pink color rectangle in the chart. Currently, the stock has broken out of this consolidation area. A breakout from this consolidation area generally indicates bullishness.
Daily Chart – GAN
#2 Above MA: The stock is currently trading above its 50-day SMA. This is a possible bullish sign.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is rising higher from below both (+DI) and (-DI).
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 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.
#6 Downtrend Broken: The daily chart shows that the stock has currently broken out of a short-term downtrend (marked as a purple color line). This is a bullish sign.
#7 Double Bottom Pattern Breakout: The weekly chart shows that the stock has currently broken out of a double bottom pattern. This is marked in purple color. A double bottom pattern is a strong bullish pattern and a breakout from it indicates that the stock could surge higher.
Weekly Chart – GAN
#8 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color), indicating bullishness.
#9 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart. This usually indicates bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for GAN is above the resistance level of $20.40.
T: Our target prices are $25 and $30 in the next 4-6 months.
SL: To limit risk, place a stop loss at $17.60. Note that this stop loss is on a closing basis.
Our target potential upside is 23% to 47% in the next 4-6 months.
For a risk of $2.80, our target rewards are $4.60 and $9.60. 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 double bottom pattern breakout level. 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