Seagate Technology Holdings PLC (NASDAQ: STX) seems to be gearing up for a surge as per its latest charts. Seagate Technology Holdings plc provides data storage technology and solutions globally. The company offers hard disk and solid state drives; solid state hybrid drives; and storage subsystems.
It also provides enterprise data solutions portfolio comprising storage subsystems and mass capacity optimized private cloud storage solutions for enterprises, cloud service providers, and scale-out storage servers and original equipment manufacturers (OEMs). The company offers external storage solutions under the Seagate Ultra Touch, One Touch, and Expansion product lines, as well as under the LaCie and Maxtor brands.
The stock was also a part of our recent watchlist.
Bullish Indications
#1 Ascending Triangle Pattern: The daily chart shows that the stock is currently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. The breakout level of the ascending triangle pattern generally acts as a good support level.
STX – Daily Chart
#2 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.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#4 Bullish RSI: The RSI is currently above 50 and moving higher in the daily chart. This indicates bullishness.
#5 Bullish ADX and DI: The ADX line has currently moved up from below –DI and +DI lines. The +DI line and ADX line are also above the –DI line. This indicates possible bullishness.
#6 Flag Pattern Breakout: The weekly chart shows that the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern and moved higher, which is a possible bullish sign.
STX – Weekly Chart
#7 MACD Above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#8 Bullish ADX and DI: The weekly chart shows that the ADX line is starting to move higher from below the +DI and -DI lines. The +DI line is also currently above the -DI 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 of STX is above the price of around $106.
TP: Our target prices are $115 and $120 in the next 3 to 5 months.
SL: To limit risk, place a stop loss at around $100.50. Note that this stop loss is on a closing basis.
Our target potential upside is 8% to 13% in the next 3-5 months.
For a risk of $5.50, the target rewards are $9.00 and $14.00. 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 with high volume from the ascending 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 its sector.
Happy Trading!
— Tara
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