Gogo Inc. (NASDAQ: GOGO) seems to be poised for a price surge as per its latest charts. Gogo Inc. is a provider of in-flight broadband Internet service and other connectivity services for commercial and business aircraft, headquartered in Chicago, Illinois.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As seen from the daily chart, the stock was recently forming a Symmetrical Triangle pattern. A symmetrical triangle pattern is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as purple color lines. The stock has currently broken out of the symmetrical triangle pattern, which is a possible bullish sign.
GOGO – Daily Chart
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This is a bullish sign.
#3 Bullish ADX and DI: The ADX indicator shows bullishness in the daily chart, as the ADX line and the +DI lines are above the -DI line, and the ADX line has started to move higher from below the +DI and -DI lines.
#4 %K above %D: The daily chart shows that the %K line (blue color) is currently above the %D line (orange color) in the stochastic. This is a bullish sign.
#5 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart. This typically indicates a bullish setup.
#6 Pennant Pattern Breakout: As seen from the weekly chart, the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic pennant pattern, which is a continuation pattern. The pennant pattern is marked in pink color lines in the weekly chart. Whenever a stock breaks out of the pennant pattern, it typically continues its previous trend which is an uptrend in this case. Currently, the stock has broken out of the pennant pattern, indicating bullishness.
GOGO – Weekly Chart
#7 Above MAs: The stock is trading above the 50-week as well as the 200-week SMA, indicating that the bulls are firmly in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for GOGO is above the price of $17.70. Alternatively, you can purchase the shares of GOGO if it corrects to the price of around $15.70.
TP: Our target prices are $23 and $27 in the next 4-6 months.
SL: To limit risk, place stop-loss at $12.50 (for entry near $15.70) and $14.50 (for entry near $17.70). Note that the stop-loss is on a closing basis.
Our target potential upside is 30% to 72% in the next 4 to 6 months.
- Entry near $15.70: For a risk of $3.20, our target rewards are $7.30 and $11.30. This is a 1:2 and 1:4 risk-reward trade.
- Entry near $17.70: For a risk of $3.20, our target rewards are $5.30 and $9.30. This is a 1:2 and 1:3 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 from the symmetrical triangle pattern with a 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.
Happy Trading!
— Tara
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