The company that provides cloud software for contact centers in the United States and internationally, Five9 Inc. (NASDAQ: FIVN) seems to be getting ready for a price bump as per the latest charts. The stock was also a part of this week’s top 10 stocks ready for a breakout.
Bullish Move – Chart Indications
#1 Consolidation Area, Ready for Breakout: The daily chart shows that the stock has been trading within a range for the past several months. This area is marked as a blue color rectangle in the daily chart. A breakout from this consolidation area would indicate possible bullishness.
Daily Chart – FIVN
#2 Above MAs: The stock is currently trading above its 50-day SMA as well as 200-day SMA. This indicates overall bullishness for the stock.
#3 Bullish Stochastic: Currently, the %K line of the stochastic has crossed above the %D line, indicating possible bullishness.
#4 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
#5 Bullish ADX and DI: The ADX line has currently started to move up from below –DI and +DI lines in the daily chart. The +DI line and the ADX line are also currently above the –DI line. This indicates possible bullishness.
#6 Flag Pattern: As seen from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrowing range. This is a classic flag pattern and is marked in the chart in purple color. A flag is a continuation pattern. Whenever a stock breaks out of this pattern, it typically continues its previous trend (uptrend in this case).
Weekly Chart – FIVN
#7 Bullish MACD: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of FIVN above the breakout level of the flag pattern at around $200.00. This is marked as a green color dotted line.
TP: Our target prices are $215 and $230 in the next 2-5 months.
SL: To limit risk, place a stop loss near $192.00. Note that the stop loss is on a closing basis.
Our target potential upside is 8% to 15% in the next 3-6 months.
For a risk of $8.00, our first target reward is $15.00 and the second target reward is $30.00. 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 flag 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 sector.
Analyst Ratings
TipRanks analytics exhibit FIVN as a Moderate Buy. The average price target for FIVN is $203.64 with a high forecast of $225.00 and a low forecast of $160.00. This is based on 17 Wall Street analysts offering 12-month price targets for Five9 in the last 3 months.
Happy Trading!
— Tara
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