The American technology company that produces a software intelligence platform based on artificial intelligence to monitor and optimize application performance and development, IT infrastructure, and user experience for businesses and government agencies throughout the world, Dynatrace Inc (NYSE: DT) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock has currently broken out of a downtrend channel. This channel is marked in purple color lines. This is a possible bullish indication.
Daily Chart – DT
#2 Trading above MAs: The price is currently above its short-term moving average of 50-day SMA as well as the longer-time moving average of 200-day SMA. This implies a possible bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line is also currently above the –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating possible bullishness.
#6 Ascending Triangle Pattern Breakout: The weekly chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color lines. A breakout from this pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
Weekly Chart – DT
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
#8 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for DT is above yesterday’s high. This translates to a price of around $50.20.
TP: Our target prices are $55 and $60 in the next 3-6 months.
SL: To limit risk, place a stop loss at $47.00. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 10% to 20% in the next 3-6 months.
For a risk of $3.20, the target rewards are $4.80 and $9.80. 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 ascending 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
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