Draftkings (NASDAQ: DKNG) Looks Ready to Make a Bullish Move

The American daily fantasy sports contest and sports betting operator, Draftkings Inc. (NASDAQ: DKNG) seem 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 has currently 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. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.

Daily Chart – DKNG

#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 usually implies a possible bullish bias for the stock.

#3 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX has started to move up from below (-DI) and (+DI).

#4 Bullish Stoch: The daily chart shows that the %K line (blue color) of the stochastic has currently crossed above the %D (orange color) line. This is a possible bullish sign.

#5 Bullish MACD: The MACD line is above the MACD signal line in the daily chart, indicating possible bullishness.

#6 Unbroken Uptrend: The weekly chart shows that the stock’s uptrend is unbroken, as it has been forming higher highs and higher lows for the past several months. This uptrend line has been marked as a purple color line. This is a possible bullish sign.

Weekly Chart – DKNG

#8 Other bullish signs: The weekly chart shows a bullish MACD, and bullish ADX and DI. The stock is also trading above its 50-week SMA. All these are bullish indications.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, the ideal buy level for DKNG is above the near-term resistance level of $64. However, you can purchase half the intended quantity of shares of DKNG above yesterday’s close, at around $59.70.

TP: Our target prices are $64 and $70 in the next 3-6 months.

SL: To limit risk, place a stop loss at $60.00 (for entry near $64.00) and $56.80 (for entry near $59.70). Note that this stop loss is on a closing basis.

Our target potential upside is nearly 7% to 17% in the next 3-6 months.

  • Entry near $59.70: For a risk of $2.90, the target rewards are $4.30 and $10.30. This is a nearly 1:2 and 1:4 risk-reward trade.
  • Entry near $64.00: For a risk of $4.00, our target reward (TP#2) is $6.00. This is a nearly 1:2 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 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

Legendary Stock-Picker Predicts Next 1,000% Stock [sponsor]
34-yr-old Matt McCall made history when he predicted five 1,000% winners on national TV. Now he's doing it all over again. Over the past decade, he's found 18 recommendations that soared 1,000% or more. And he just went public with what he predicts will be his next 1,000% winner. If you've ever wondered how legendary investors find stocks that shoot up 10X - and how you can do it too - click here.