Chegg Inc. (NYSE: CHGG) seems to be getting ready for a price bump as per the latest charts. Chegg, Inc., is an American education technology company that provides digital and physical textbook rentals, textbooks, online tutoring, and other student services.
The company operates direct-to-student learning platform that supports students on their journey from high school to college and into their career with tools designed to help them to learn their course materials, succeed in their classes, and save money on required materials.
Bullish Move – Chart Indications
#1 Consolidation Area: The daily chart shows that the stock has been trading within a range for the past several weeks. This area is marked as a pink color rectangle in the daily chart. A breakout from this consolidation area would indicate possible bullishness.
CHGG – Daily Chart
#2 Above MA: The stock is currently trading above its shorter-term moving average of 50-day SMA. This indicates overall bullishness for the stock.
#3 Bullish Stoch: The daily chart shows that the %K line of the stochastic is above the %D line, indicating possible bullishness.
#4 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
#5 Bullish ADX and DI: The ADX line is currently moving up from below –DI and +DI lines in the daily chart. The +DI line and the ADX line are also currently above the –DI line. This indicates possible bullishness.
#6 Double Bottom Pattern: The weekly chart shows that the stock is currently forming a double bottom pattern. This is marked in purple color. A double bottom pattern is a strong bullish pattern and a breakout from it would indicate that the stock could surge higher.
CHGG – Weekly Chart
#7 Bullish RSI: Relative strength index (RSI) is currently moving higher from oversold levels. This indicates bullishness.
#8 Bullish Stoch: In the weekly chart, the %K line of the stochastic has crossed above the %D line, and is also moving higher from oversold levels. All this indicates bullishness.
#9 Bullish MACD: In the weekly chart as well, the MACD line (blue color) is currently above the signal line (orange color), signifying bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CHGG is above the price of $33.70.
TP: Our target prices are $39 and $43 in the next 2-6 months.
SL: To limit risk, place a stop loss near $31.00. Note that the stop loss is on a closing basis.
Our target potential upside is 16% to 28% in the next 2-6 months.
For a risk of $2.70, our first target reward is $5.30 and the second target reward is $9.30. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the consolidation area 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 sector.
Happy Trading!
— Tara
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