Bloom Energy Corp (NYSE: BE) seems to be getting ready for a price bump as per the latest charts. The San Jose, California-based company manufactures and markets solid oxide fuel cells that produce electricity on-site.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was forming a falling wedge pattern for the past few weeks. These are marked as orange color lines. The stock has currently broken out of the falling wedge pattern with high volume and looks poised for an upmove. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
BE – Daily Chart
#2 Price above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating that the bulls are presently 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 as a potential buy signal.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line and the ADX line are greater than the (-DI) line and the ADX line is starting to move higher from below (-DI) and (+DI) lines.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 38.2% Fibonacci support level before moving higher, as seen in the weekly chart. This is a possible bullish sign.
BE – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart and is also moving higher from oversold levels. 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 price for BE is if the stock closes above the price of $30.70.
TP: Our target prices are $35 and $42 in the next 4-6 months.
SL: To limit risk, place a stop loss below $27.90. Note that the stop loss is on a closing basis.
Our target potential upside is 14% to 37% in the next 4-6 months.
For a risk of $2.80, our first target reward is $4.30 and the second target reward is $11.30. 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 falling wedge 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 energy sector.
Happy Trading!
— Tara
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