Rocket Lab USA, Inc. (NASDAQ: RKLB) seems to be gearing up for a surge as per its latest charts. Rocket Lab USA, Inc., an aerospace company, focuses on developing rocket launch and control systems for the space and defense industries. The company provides launch services, spacecraft components, satellites and other spacecraft, and on-orbit management solutions; and designs, manufactures, and sells Electron and Neutron launch vehicles, as well as offers Photon platform for spacecraft solutions.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has broken out of a Symmetrical Triangle pattern. This pattern is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This 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.
RKLB – Daily Chart
#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 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and ADX has started rising from below both (+DI) and (-DI).
#5 Bullish Stoch: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart. This is a possible bullish indication.
#6 Double Bottom Pattern: The daily chart shows that the stock was forming a double bottom pattern. This is marked in purple color. A double bottom pattern is a bullish reversal pattern and a breakout from it indicates that the stock could move upwards. Currently, the stock looks poised for a breakout from the double bottom pattern.
RKLB – Weekly Chart
#8 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for RKLB is in two scenarios.
- If the stock closes above the price of $14.60.
- If the stock corrects to the price of around $11.80.
These levels are marked as green color dotted lines in the daily chart.
TP: Our target prices are $17 and $20 in the next 3-5 months.
SL: To limit risk, place a stop loss at $13.00 (for entry near $14.60) and $9.50 (for entry near $11.80). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 16% to 70% in the next 3-6 months.
- Entry near $14.60: For a risk of $1.60, the target rewards are $2.40 and $5.40. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $11.80: For a risk of $2.30, the target rewards are $5.20 and $8.20. 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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