The energy holding company that operates as a regulated natural gas and electric utility company in the United States, NiSource Inc. (NYSE: NI) seems poised for a price surge according to its latest charts.
Bullish Indications
#1 Double Bottom Pattern: The daily chart shows that the stock is currently forming a double bottom pattern. This is marked in purple color. A double bottom pattern is a strong bullish pattern and a breakout from it would indicate that the stock could surge higher.
Daily Chart – NI
#2 Above MAs: The stock price is currently above its short-term moving average of 50-day as well as the long-term moving average of 200-day SMA. This is a possible bullish sign.
#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 Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#5 Formation of Consolidation area: The weekly chart shows that the stock has been trading within a range for the past several weeks. This indicates consolidation. The consolidation area is marked as a purple color rectangle in the weekly chart. A breakout from this consolidation area generally indicates bullishness.
Weekly Chart – NI
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of the prevailing downtrend and is now slowly moving higher. The downtrend line is marked in pink color. The stock is also trading above its 50-week SMA. All these are possible bullish signs.
#7 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color), indicating bullishness.
#8 Bullish ADX and DI: The weekly chart shows that the ADX line has started moving higher from below the –DI and +DI lines. The +DI line and the ADX line are also currently above –DI line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for NI is above the breakout level of the double bottom pattern, at around $25.30. This is marked in the daily chart as a purple color dotted line.
TP: Our target prices are $30 and $35 in the next 4-6 months.
SL: To limit risk, place a stop loss at $22.70. Note that this stop loss is on a closing basis.
Our target potential upside is 19% to 38% in the next 4-6 months.
For a risk of $2.60, our target rewards are $4.70 and $9.70. This is a nearly 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 consolidation area. 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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