The company that operates an electronic online platform for artists, art dealers, and art investors to offer and trade in valuable artwork, Takung Art Co Ltd (NYSE: TKAT) seems to be getting ready for a price bump 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 few weeks. This is marked as purple color lines. The stock has currently broken out the upper rail of the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – TKAT
#2 Price above MA: The stock is currently trading above its 200-day SMA, indicating that the bulls are presently 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 as a potential buy signal.
#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 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and the ADX line is starting to move up from below (-DI) and (+DI) lines.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 23.6% Fibonacci support level before moving higher, as seen in the weekly chart. The stock is also trading above its 50-week as well as 200-week SMA. This seems like a good area for the stock to surge higher.
Weekly Chart – TKAT
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for TKAT is if the stock closes above $25.60.
TP: Our target prices are $30 and $40 in the next 4-6 months.
SL: To limit risk, place a stop loss below $22.90. Note that the stop loss is on a closing basis.
Our target potential upside is 17% to 56% in the next 4-6 months.
For a risk of $2.70, our first target reward is $4.40 and the second target reward is $5.30. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x 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 energy sector.
Happy Trading!
— Tara
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