Xilinx, Inc. (NASDAQ: XLNX) seems to be getting ready for a price bump as per the latest charts. Xilinx, Inc. is an American technology company that is primarily a supplier of programmable logic devices. The company invented the field-programmable gate array. It is the semiconductor company that created the first fabless manufacturing model.
Bullish Move – Chart Indications
#1 Flag Breakout: As you can see from the daily chart, 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. Currently, the stock has broken out of the flag. 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).
XLNX – Daily Chart
#2 Price above MAs: The stock is currently trading above the short-term moving average of 50-day SMA as well as the longer-term moving average of 20-day SMA. This indicates that the bulls are slowly gaining control.
#3 Bullish Stoch: The %K line of the stochastic is above the %D line. This indicates bullishness.
#4 Bullish RSI: The RSI is currently above 50 and moving higher. This is a possible bullish sign.
#5 Bullish ADX and DI: The ADX line has started to move up from below the (–DI) and (+DI) lines, while the (+DI) line and the ADX lines are currently above the (–DI) line. All these indicate possible bullishness.
#6 Fibonacci Support: The weekly chart shows that the stock has currently bounced back higher after taking support at the 61.8% Fibonacci level. The stock is currently trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
XLNX – Weekly Chart
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
#8 Bullish ADX and DI: In the weekly chart as well, the ADX line and the (+DI) line are currently above the (-DI) line, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for XLNX is if it trades above the price of around $225.00.
TP: Our target prices are $230 and $240 in the next 2-6 months.
L: To limit risk, place a stop loss below $222. Note that the stop loss is on a closing basis.
Our target potential upside is 2% to 7% in the next 2-6 months.
For a risk of $3.00, our first target reward is $5.00 and the second target reward is $15.00. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the flag 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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