Groupon Inc Common Stock (NASDAQ: GRPN) shows signs of an upcoming price surge according to its latest charts. Groupon, Inc. operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants; and first-party goods inventory. It serves customers through its mobile applications and websites.
Bullish Indications
#1 Consolidation Area: The daily chart shows that the stock has been trading within a consolidation area for the past several days. This is marked in the daily chart as a pink color rectangle. Currently, the stock looks poised for a breakout from this consolidation area. Once a stock breaks out from a consolidation area, it usually moves higher.
GRPN – Daily Chart
#2 Above MA: The stock is currently trading above its 50-day SMA and had moved higher with high volume. This indicates an overall bullishness of the stock.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because the +DI line is above the -DI line and the ADX line is currently moving higher from the +DI and -DI lines.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The weekly chart shows that the stock had taken support at the 23.6% Fibonacci support level of the upmove before starting to move higher. This is a possible bullish sign.
GRPN – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 MACD above Signal Line: As you can see from the weekly chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
#9 Bullish ADX and DI: In the weekly chart as well, the ADX indicator shows bullishness because the +DI line and the ADX line are above the -DI line and the ADX line is currently moving higher from the +DI and -DI lines.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for GRPN is above the price of around $28.
TP: Our target prices are $34 and $39 in the next 2-5 months.
SL: To limit risk, place a stop loss at $24.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 21% to 39% in the next 2-5 months.
For a risk of $3.60, our target rewards are $6.00 and $11.00. This is almost 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 consolidation area. 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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