Enphase Energy Inc. (NASDAQ: ENPH) seems to be poised for a price surge as per its latest charts. ENPH is an energy technology company headquartered in Fremont, California that designs and manufactures software-driven home energy solutions that span solar generation, home energy storage, and web-based monitoring and control.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock has currently broken out of a symmetrical triangle pattern, which is marked as purple color lines. A symmetrical triangle pattern is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. A breakout from this pattern is a possible bullish sign.
ENPH – Daily Chart
#2 Above MAs: In the daily chart, the stock is currently trading above its 50-day as well as 200-day SMA. This implies that the bulls are currently in control.
#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 (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 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 orange 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. The stock has currently broken out of the pennant pattern and is above the previous high price (shown as pink color dotted line), indicating possible bullishness.
ENPH – Weekly Chart
#6 Bullish Stochastic: The stochastic in the weekly chart is currently near oversold levels and moving higher. The %K line has also crossed above the %D line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ENPH is above the price of around $224.00.
Note: Alternatively, you may purchase the shares of ENPH if it corrects to the price of around $190, and set a stop loss at around $174.
TP: Our target prices are $250 and $270 in the next 4-6 months.
SL: To limit risk, place stop-loss at $207. Note that the stop loss is on a closing basis.
Our target potential upside is 12% to 21% in the next 4-6 months.
For a risk of $17.00, our target rewards are $26.00 and $46.00. This is a nearly 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 from the symmetrical triangle pattern breakout level 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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