The American provider of residential solar panels and home batteries, headquartered in San Francisco, California, Sunrun Inc. (NASDAQ: RUN) 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 pattern is marked as blue 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 – RUN
#2 Price above MA: The stock is currently trading above its 50-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 RSI: The RSI is currently above 50 and moving higher, indicating the strength of the current upmove.
#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 the (-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 38.2% Fibonacci support level before moving higher, as seen in the weekly chart. The stock is also trading above its 200-week SMA. This seems like a good area for the stock to surge higher.
Weekly Chart – RUN
#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.
#8 Bullish RSI: The RSI is currently moving higher from oversold levels and is nearing 50 in the weekly chart. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for RUN is if the stock closes above $50.80.
TP: Our target prices are $60 and $70 in the next 4-6 months.
SL: To limit risk, place a stop loss below $45.40. Note that the stop loss is on a closing basis.
Our target potential upside is 18% to 38% in the next 4-6 months.
For a risk of $5.40, our first target reward is $9.20 and the second target reward is $19.20. 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 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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