Carparts.Com Inc. (NASDAQ: PRTS) seems to be poised for a price surge according to its charts. CarParts.com is an American online provider of aftermarket auto parts, including collision parts, engine parts, and performance parts and accessories.
Bullish Indications
#1 Symmetrical Triangle Pattern: The daily charts shows that a symmetrical triangle pattern is being formed for the stock. This is marked in purple color. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.
Daily Chart – PRTS
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-time moving average of 200-day SMA. This is a possible bullish sign.
#3 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#4 MACD above Signal Line: In the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, and is also moving higher from oversold levels, indicating possible 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 pink color line. The stock had taken support at this uptrend line multiple times before moving higher.
Weekly Chart – PRTS
#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.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for PRTS is above the price of around $20.60. This is marked as a green color dotted line in the daily chart.
TP: Our first prices are $24 and $30 in the next 4-6 months.
SL: To limit risk, place a stop loss at $18.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 17% to 46% in the next 4-6 months.
For a risk of $2.10, our target rewards are $3.40 and $9.40. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x 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 the sector.
Happy Trading!
Tara