The company that operates as an integrated energy infrastructure company worldwide, New Fortress Energy Inc. (NASDAQ: NFE) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Breakout: As you can see from the daily chart, the stock has been forming a falling wedge pattern for the past few months. This is marked as purple color lines. The stock has currently broken out of the falling wedge pattern after taking support at the bottom of the wedge. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – NFE
#2 RSI Strong: Relative strength index (RSI) is currently above 50 and moving higher. This indicates the strength of the current upmove.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic and it has moved higher from oversold levels, indicating possible bullishness.
#4 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 as a potential buy signal.
#5 Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#6 Double Bottom Pattern: In the weekly chart, we can see that the stock is forming a double bottom pattern. This pattern is shown in the figure in pink color. The stock has taken support at the second bottom and is currently moving up. A double bottom pattern is a bullish reversal pattern, indicating that the stock could possibly move upwards shortly.
Weekly Chart – NFE
#7 Bullish Stoch: The %K line of the stochastic has currently crossed above the %D line near oversold levels in the weekly chart, indicating possible bullishness.
#8 Above MA: In the weekly chart, the stock is currently trading above its 50-week SMA, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for NFE is if it moves above the resistance level of $57.10.
TP: Our target prices are $61 and $65 in the next 4-6 months.
SL: To limit risk, place a stop loss below $54.70. Note that the stop loss is on a closing basis.
Our target potential upside is 7% to 14% in the next 4-6 months.
For a risk of $2.40, our first target reward is $3.90 and the second target reward is $7.90. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge pattern 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 energy sector.
Happy Trading!
— Tara
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