The company that intends to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more operating businesses, Gores Holdings VI Inc. (NASDAQ: GHVI) 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 – GHVI
#2 Price above MA: The stock is currently above the 50-day SMA, indicating that the bulls currently have an upper hand.
#3 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.
#4 Bullish Stoch: The daily chart shows that the %K line is above the %D line of the stochastic, indicating possible bullishness.
#5 Above Resistance Area: The weekly chart shows that the stock is currently trading above a resistance-turned-support area, which is marked as a pink color dotted line. This is a bullish indication.
Weekly Chart – GHVI
#6 Bullish RSI: The weekly chart shows that the RSI is currently above 50 and moving higher. This is a possible bullish sign.
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 Bullish ADX and DI: In the weekly chart as well, the ADX line has currently moved up from below the (+DI) and (-DI) lines. The (+DI) and the ADX lines are also 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 GHVI is if the stock closes above the price of $17.20.
TP: Our target prices are $21 and $25 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $15.00. Note that the stop loss is on a closing basis.
Our target potential upside is 22% to 45% in the next 3-6 months.
For a risk of $2.20, our first target reward is $3.80 and the second target reward is $7.80. 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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