Plug Power Inc. (NASDAQ: PLUG) shows signs of an upcoming price surge according to its latest charts. Plug Power Inc. is an American company engaged in the development of hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock had recently formed a symmetrical triangle pattern. This pattern is shown as orange 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.
PLUG – Daily Chart
#2 Price Above MA: The stock is currently above the 50-day SMA, indicating that the bulls are gaining control.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#5 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 as seen in the weekly chart. Thereafter, the stock had moved higher and is currently above the 38.2% Fibonacci support level. This is a possible bullish sign.
PLUG – Weekly Chart
#6 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly charts as well. It is also moving higher after reaching oversold levels, indicating overall bullishness for the stock.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for PLUG is above the price of around $35.20. This is marked as a green color dotted line in the chart.
TP: Our target prices are $40 and $45 in the next 4-6 months based on the breakout from the symmetrical triangle pattern.
SL: To limit risk, place a stop loss at $32.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 14% to 28% in the next 4-6 months.
For a risk of $2.90, our target rewards are $4.80 and $9.80. This is an almost 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x 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
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