The company that operates as a specialty retailer of sewing, and arts and crafts category products in the United States, Joann Inc. (NASDAQ: JOAN) seem to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink color lines. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA. This usually implies a possible bullish bias for the stock.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than (-DI), and ADX has started to move up from below (-DI) and (+DI).
#4 Bullish MACD: The MACD line is above the MACD signal line in the daily chart, indicating possible bullishness.
#5 Bullish Stoch: The %K line (blue line) is currently above the %D line (orange line) of the stochastic in the daily chart. This usually indicates bullishness.
#6 Unbroken Uptrend: The weekly chart shows that the stock’s uptrend is unbroken, as it has been forming higher highs and higher lows for the past several months. This uptrend line has been marked as a purple color dotted line. The stock had taken support at this uptrend line multiple times before moving higher.
#7 Bullish Stoch: The %K line (blue line) is currently above the %D line (orange line) of the stochastic in the weekly chart as well. This usually indicates bullishness.
#8 Bullish ADX and DI: In the weekly chart as well, the ADX indicator shows bullishness because the (+DI) and ADX lines are greater than (-DI)s line, and ADX has moved up from below (-DI) and (+DI) lines.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for JOAN is above yesterday’s close, which translates to a price of around $16.50.
TP: Our target prices are $20 and $24 in the next 3-6 months.
SL: To limit risk, place a stop loss at $14.50. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 21% to 46% in the next 3-6 months.
For a risk of $2.00, the target rewards are $3.50 and $7.50. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical triangle pattern. 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 its sector.
Happy Trading!
— Tara
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