The online marketing solution provider in the People’s Republic of China, that connects advertisers and online media, and help advertisers to manage their online marketing activities in various ways, Baosheng Media Group Holdings Ltd (NASDAQ: BAOS) seems to be getting ready for a price bump in the short-term 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 several months. This pattern is marked as purple color lines. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term. Currently, the stock has broken out of the falling wedge pattern, indicating possible bullishness.
Daily Chart – BAOS
#2 Price above MA: The stock is currently above the 50-day SMA, indicating that the bulls currently have an upper hand.
#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 the (+DI) line, as well as the ADX line, are currently above the (-DI) line.
#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 currently trading above a resistance-turned-support area, which is marked as a green color dotted line. The stock is also trading above the previous lower-low, which is marked as a pink color ellipse. All these are bullish indications.
Weekly Chart – BAOS
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 Bullish ADX and DI: In the weekly chart as well, the ADX line and the (+DI) line are above the (-DI) line. This is a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BAOS is if the stock closes above the price of $5.25.
TP: Our target prices are $7.50 and $10 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $4.00. Note that the stop loss is on a closing basis.
Our target potential upside is 43% to 91% in the next 3-6 months.
For a risk of $1.25, our first target reward is $2.25 and the second target reward is $4.75. 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 falling wedge 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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