SoFi Technologies Inc. (NASDAQ: SOFI) seems to be getting ready for a price bump as per the latest charts. SoFi provides financial products that include student loan refinancing, mortgages, personal loans, credit card, investing, and banking through both mobile app and desktop interfaces
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 purple color lines. The stock has currently broken out of the falling wedge pattern 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.
#2 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than the (-DI) line and the ADX line is starting to move higher from below (-DI) and (+DI) lines.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish RSI: The RSI is above 50 and moving higher, indicating bullishness.
#5 Bullish Engulfing: The latest candlestick pattern in the weekly chart is a bullish engulfing pattern which is a bullish reversal candle. This is marked as an orange color ellipse. This implies that the stock may move higher soon.
#6 Above Support Area: The weekly chart shows that the stock is trading above a support area, which is marked as a pink color dotted line. This is a possible bullish sign.
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart and is also moving higher from oversold levels. This is a possible bullish indication.
#8 Bullish RSI: In the weekly chart as well, the RSI is currently nearing 50 and moving higher. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for SOFI is if the stock closes above the price of $16.00.
TP: Our target prices are $19 and $23 in the next 4-6 months.
SL: To limit risk, place a stop loss below $14.30. Note that the stop loss is on a closing basis.
Our target potential upside is 19% to 44% in the next 4-6 months.
For a risk of $1.70, our first target reward is $3.00 and the second target reward is $7.00. 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.
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