Ballard Power Systems Inc. (NASDAQ: BLDP) seems to be poised for a price surge as per its latest charts. Ballard Power Systems Inc. is a developer and manufacturer of proton exchange membrane fuel cell products for markets such as heavy-duty motive, portable power, material handling as well as engineering services.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was trading within a falling wedge pattern during the past few months. This is marked in the daily chart in purple color. A Falling Wedge Pattern is a bullish pattern. Once the stock moves up and breaks out from it, it has the potential to move further up. Currently, the stock has broken out of the falling wedge pattern, which is a bullish sign.
BLDP – Daily Chart
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color). This is a possible bullish setup.
#3 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the daily chart, indicating bullishness.
#4 Bullish RSI: The daily chart shows that the RSI is currently near 50 and moving higher, indicating the strength of the current upmove.
#5 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This is a resistance-turned-support area, as the stock had previously taken support near this area before moving higher.
BLDP – Weekly Chart
#6 Oversold RSI: The RSI is currently moving higher from oversold levels as seen on the weekly chart, indicating that a reversal may be imminent.
#7 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the weekly chart as well. It is also moving higher from oversold levels. All these indicate bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of BLDP above the near-term resistance level. This translates to a price of around $13.30. However, you can purchase half the intended quantity of shares of BLDP above the price of around $11.50.
TP: Our target prices are $16 and $19 in the next 4-6 months.
SL: To limit risk, place stop loss below $11.90 (for entry near $13.30) and $9.00 (for entry near $11.50). Note that stop loss is on a closing basis.
Our target potential upside is nearly 20% to 65% in the next 4-6 months.
- Entry near $13.30: For a risk of $1.40, our target rewards are $2.70 and $5.70. This is a 1:2 and 1:4 risk-reward trade.
- Entry near $11.50: For a risk of $2.50, our target rewards are $4.50 and $7.50. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 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 breakout level with a 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 sector.
Happy Trading!
— Tara
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