The diversified industrial company that designs and manufactures high-precision solutions, components, and assemblies for the medical, aerospace and defense, electrical, automotive, and general industrial markets, NN, Inc. (NASDAQ: NNBR) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern and moved higher. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The breakout level of the ascending triangle pattern generally acts as a good support level.
Daily Chart – NNBR
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 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.
#6 Downtrend Broken: The weekly chart shows that the stock is currently moving higher after breaking out of a downtrend. The downtrend line has been marked in pink color. This is a possible bullish sign.
Weekly Chart – NNBR
#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 bullishness.
#8 Bullish ADX and DI: The weekly chart shows that the ADX line and the +DI line are currently above the -DI line, indicating possible bullishness.
#9 Bullish MACD: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level of NNBR is if it corrects to the price of around $7.20. Alternatively, you can purchase half the intended quantity of shares of NNBR above Friday’s close, which translates to a price of around $8.00.
TP: Our target prices are $10 and $14 in the next 2 to 6 months.
SL: To limit risk, place a stop loss at around $6.70 (for entry near $8.00) and $6.30 (for entry near $7.20). Note that this stop loss is on a closing basis.
Our target potential upside is 25% to 94% in the next 3-5 months.
- Entry near $7.20: For a risk of $0.90, the target rewards are $2.80 and $6.80. This is a nearly 1:3 and 1:8 risk-reward trade.
- Entry near $8.00: For a risk of $1.30, the target rewards are $2.00 and $6.00. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 8x 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 breakout level. 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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