The company that provides solutions that allow customers to capture, analyze, and act upon data seamlessly and offers general-purpose servers for multi-workload computing and workload-optimized servers, Hewlett Packard Enterprise Co (NYSE: HPE) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern: The stock’s daily chart shows that it has been forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend.
Daily Chart – HPE
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
#3 Bullish RSI: The RSI is currently above 50 and moving higher. This indicates the strength of the current bullish move.
#4 Bullish ADX and DI: The ADX line has currently started to move up from below –DI and +DI lines in the daily chart. The +DI and ADX lines are also currently above –DI line. This indicates possible bullishness.
#5 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.
#6 Above Resistance Area: The weekly chart shows that the stock is trading above a resistance area, which is marked as a purple color dotted line. This is a possible bullish indication. The stock is also trading above its 50-week as well as 200-week SMA, indicating the overall bullishness.
Weekly Chart – HPE
#7 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the weekly chart. This typically indicates a bullish setup.
#8 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of HPE above the near-term resistance level. This translates to a price of around $17.50.
Note: The buy level has been marked as a green color dotted line in the weekly chart.
TP: Our target prices are $21 and $25 in the next 3-6 months.
SL: To limit risk, place a stop loss near $15.50. Note that this stop loss is on a closing basis.
Our target potential upside is 20% to 43% in the next 4-6 months.
For a risk of $2.00, the target rewards are $3.50 and $7.50. 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 ascending 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 its sector.
Happy Trading!
Tara
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