The company that focuses on effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, Star Peak Energy Transition Corp (NYSE: STPK) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, BRT had recently formed a symmetrical triangle pattern. This pattern is shown as pink color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – STPK
#2 Bullish RSI: The RSI had started to move up from oversold levels. It is currently above 50 and moving higher, 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 (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#5 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 38.2% Fibonacci support level of the upmove as seen in the weekly chart. Thereafter, the stock had moved higher and is currently near the 50% Fibonacci support level. This is a possible bullish sign.
Weekly Chart – STPK
#6 Bullish RSI: The RSI is above 50 and moving higher in the weekly charts as well after reaching oversold levels, indicating overall bullishness for the stock.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for STPK is above yesterday’s close. This translates to a price of around $29.60.
TP: Our target prices are $35 and $40 in the next 4-6 months based on the breakout from the symmetrical triangle pattern.
SL: To limit risk, place a stop loss at $26.60. Note that this stop loss is on a closing basis.
Our target potential upside is almost 18% to 35% in the next 4-6 months.
For a risk of $3.00, our target rewards are $5.40 and $10.40. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x 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 the sector.
Happy Trading!
— Tara
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