The online mobile multiplayer video game competition platform that is integrated into a number of iOS and Android games, Skillz Inc. (NYSE: SKLZ) seems to be getting ready for a price bump in the short term as per the latest charts.
Bullish Move – Chart Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been forming a downtrend channel during the past several months. This is marked in purple color in the daily chart below. The stock had typically taken support at the bottom of the channel before bouncing back. The stock has currently broken out of the downtrend channel, indicating possible bullishness.
Daily Chart – SKLZ
#2 Price above MAs: The stock is currently above the 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#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 ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and the ADX line has started rising from below both (+DI) and (-DI).
#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 Double Bottom Pattern: The weekly chart shows that the stock has been forming a double bottom pattern. This is marked in the chart in pink color. A double bottom pattern is a bullish reversal pattern and a breakout from it indicates that the stock could possibly move upwards. The stock is also trading above its 50-week SMA, indicating that the bulls are still in control.
Weekly Chart – SKLZ
#7 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line in the weekly chart. This indicates possible bullishness.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of SKLZ above the price of around $21.90.
TP: Our target prices are $25 and $30 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $19.90. Note that the stop loss is on a closing basis.
Our target potential upside is 14% to 37% in the next 3-6 months.
For a risk of $2.00, our target rewards are $3.10 and $8.10. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend channel breakout level 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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