The American internet company that focuses on cloud content management and file sharing service for businesses, Box Inc. (NYSE: BOX) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern: The daily chart shows that the stock has been forming 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 – BOX
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for 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), indicating a possible bullish bias.
#4 Bullish RSI: The daily chart shows that the RSI is above 50 and moving higher, indicating possible bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because the ADX line and the (+DI) line are greater than the (-DI) line and the ADX line is rising from below both (+DI) and (-DI) lines.
#6 IH&S Pattern: As you can see from the weekly chart, the stock is currently forming an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in orange color. An IH&S pattern is a strong bullish pattern and a breakout from this pattern indicates that the stock may move higher in the short term.
Weekly Chart – BOX
#7 Bullish MACD: In the weekly chart as well, the MACD line is above the MACD signal line, indicating possible bullishness.
#8 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart, which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BOX is above the price of around $21.10.
TP: Our target prices are $25 and $28 in the next 3-6 months.
SL: To limit risk, place a stop loss at $18.50. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 19% to 33% in the next 3-6 months.
For a risk of $2.60, the target rewards are $3.90 and $6.90. 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 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