Upstart Holdings Inc. (NASDAQ: UPST) seems to be poised for a price surge as per its latest charts. Upstart is an AI lending platform that partners with banks and credit unions to provide consumer loans using non-traditional variables, such as education and employment, to predict creditworthiness.
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 days. This is marked in the daily chart in purple color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
UPST – Daily Chart
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
#3 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is currently above the (-DI) line and the ADX line has started to rise from below both (+DI) and (-DI) lines. These point to a possible upmove in the near term.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart, indicating possible bullishness.
#5 Broken Downtrend: The weekly chart shows that the stock has broken out of the prevailing downtrend and has started moving higher. The downtrend line is shown in pink color. A breakout from a downtrend seems like a possible bullish indication.
UPST – Weekly Chart
#5 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly chart, and the stoch is also moving higher from oversold levels, indicating possible bullishness.
#6 Oversold RSI: The RSI is currently moving higher from oversold levels, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for UPST is above the price of $118.00. However, you can purchase half the intended quantity of shares of UPST above $111.00.
TP: Our target prices are $124 and $131 in the next 2-6 months.
SL: To limit risk, place stop-loss below $104.00 (for entry near $111) and $114 (for entry near $118) . Note that the stop loss is on a closing basis.
Our target potential upside is 5% to 18% in the next 2-6 months.
- Entry near $111: For a risk of $7.00, our target rewards are $13.00 and $20.00. This is an almost 1:2 and 1:3 risk-reward trade.
- Entry near $118: For a risk of $4.00, our target rewards are $6 and $13.00. This is an 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 from the falling wedge pattern 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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