The silver and other precious metals mining company based in Coeur d’Alene, Idaho, Hecla Mining Company (NYSE: HL) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock was trading within a trend channel for the past few months. This channel is marked on the daily chart in purple color. Currently, the stock has broken out of the channel. This seems like a possible bullish indication.
Daily Chart – HL
#2 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX has started rising from below both (+DI) and (-DI). These point to a possible upmove in the near-term.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color). This is a possible bullish setup.
#4 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating that the bulls are currently in control.
#5 Bullish Stochastic: The %K line is currently above the %D line in the stochastic, indicating possible bullishness.
#6 Cup and Handle Pattern Breakout: The weekly chart shows that the stock had formed a cup and handle pattern. This pattern is marked in the chart in pink color. A cup and handle pattern is a consolidation and breakout pattern and a breakout from it indicates that the stock may move higher in the short term.
Weekly Chart – HL
#7 MACD above Signal Line: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal.
#8 Bullish Aroon: The value of Aroon Up is above 70 and Aroon Down is below 30 in the weekly chart. This indicates possible bullishness.
#9 Bullish ADX and DI: The weekly chart shows that the +DI line and the ADX line is currently above -DI line and the ADX line has started to move higher. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of HL above yesterday’s close, at a price of around $7.70.
TP: Our target prices are $9.50 and $12 in the next 3-6 months.
SL: To limit risk, place a stop loss at $6.60. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 23% to 56% in the next 3-6 months.
For a risk of $1.10, our first target reward is $1.80 and the second target reward is $4.30. This is a 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel breakout level with 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 new government rules or regulatory changes in its sector.
Happy Trading!
— Tara
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