The biotechnology company which develops manufactures and markets proprietary biological testing technologies with applications in life-sciences, Luminex Corporation (NASDAQ: LMNX) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock was forming a downtrend channel during the past several months. This is marked in purple color in the daily chart below. The stock had typically taken support at the bottom of the channel before bouncing back. The stock has currently broken out of the downtrend channel, indicating possible bullishness.
#2 Price above MAs: The stock is currently above the 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#3 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.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Double Bottom Pattern: The weekly chart shows that the stock has been forming a double bottom pattern. This is marked in the chart in blue color. A double bottom pattern is a bullish reversal pattern and a breakout from it indicates that the stock could possibly move upwards. The stock is also trading above its 50-week as well as 200-week SMA, indicating that the bulls are still in control.
#7 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line in the weekly chart. This indicates possible bullishness.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of LMNX above yesterday’s close, at a price of around $34.00.
TP: Our target prices are $37 and $42 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $32.00. Note that the stop loss is on a closing basis.
Our target potential upside is 9% to 24% in the next 3-6 months.
For a risk of $2.00, our target rewards are $3.00 and $8.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend 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 regulatory changes in the sector.
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