The company that develops Bi-directional bi-polar junction TRANsistor solid state switch technology, Ideal Power Inc. (NASDAQ: IPWR) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock has been trading within a downtrend channel for the past few months. This channel is marked in the daily chart in orange color dotted lines. Currently, the stock has broken out of this channel, indicating that it has the potential to surge ahead.
Daily Chart – IPWR
#2 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock was forming a symmetrical triangle pattern. This pattern is shown as purple color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
#3 Above MA: The stock is currently trading above its 50-day as well as 200-day SMA, indicating the overall bullishness of the stock.
#4 Bullish ADX: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX line are also currently above –DI line. All these indicate possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 23.6% Fibonacci support level of the upmove before moving higher, as seen in the weekly chart. The stock is also currently trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
Weekly Chart – IPWR
#7 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart as well. This usually indicates bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for IPWR is above the price of $16.10.
TP: Our target prices are $20 and $25 in the next 3-6 months.
SL: To limit risk, place a stop loss at $13.60. Note that this stop loss is on a closing basis.
Our target potential upside is almost 24% to 55% in the next 3-6 months.
For a risk of $2.50, our target rewards are $3.90 and $8.90. This is almost 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 downtrend channel. 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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