Canoo Inc. (NASDAQ: GOEV) seems to be poised for a price surge according to its charts. Canoo is a startup American manufacturer of electric vehicles. The company plans to sell a minivan in the year 2022. The company also plans to produce commercial electric vehicles such as vans for vehicle rental and ride-sharing services.
The stock was also a part of our recent watchlist.
Bullish Indications
#1 Symmetrical Triangle Pattern breakout: The daily charts shows that the stock was recently forming a symmetrical triangle pattern. This is marked in pink 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 trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern. This is a possible bullish sign.
GOEV – Daily Chart
#2 Bullish Stoch: In the daily chart, the %K line of the stochastic is above the %D line, which is a possible bullish sign.
#3 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#4 Bullish ADX: The ADX line is currently moving up from below –DI and +DI lines. The +DI line and the ADX line are also currently above the –DI line. This indicates possible bullishness.
#5 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.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend line. This line is shown in purple color in the chart below. This is a possible bullish sign.
GOEV – Weekly Chart
#7 Bullish MACD: In the weekly chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of GOEV above the price of $11.15. This is marked as a green color dotted line in the chart.
TP: Our target prices are $13 and $15 in the next 2-6 months.
SL: To limit risk, place a stop loss at $9.90. Note that this stop loss is on a closing basis.
Our target potential upside is almost 17% to 35% in the next 2-6 months.
For a risk of $1.25, our target rewards are $1.85 and $3.85. 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 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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