The blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, DMY Technology Group, Inc. II (NYSE: DMYD) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was forming a falling wedge pattern for the past several days. It had typically taken support at the bottom of the wedge before bouncing back. This pattern is marked in purple color. The stock has currently broken out of the falling wedge pattern. A breakout from the wedge indicates that the stock may move higher.
Daily Chart – DMYD
#2 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.
#3 Price above MA: The price is currently above the short-term moving average of 50-day SMA. This usually implies a possible bullish bias for the stock.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is moving up from below (-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 Above Previous High: The weekly chart shows that the stock has currently broken out of the previous high and is trading above it. This is marked as a pink color dotted line. A breakout from the previous high price usually indicates that the stock would move higher.
Weekly Chart – DMYD
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well. It is also moving up from oversold levels. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for DMYD is above the price of around $22.50.
TP: Our target prices are $26 and $30 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $20.20. Note that the stop loss is on a closing basis.
Our target potential upside is 16% to 33% in the next 3-6 months.
For a risk of $2.30, our first target reward is $3.50, and the second target reward is $7.50. 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 sector.
Happy Trading!
— Tara
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