Cano Health Inc. (NYSE: CANO) shows signs of an upcoming price surge according to its latest charts. Cano Health, Inc. provides primary care medical services to its members in the United States and Puerto Rico. It owns and operates medical centers enabled by CanoPanorama. The company also operates pharmacies, as well as provides dental services in its medical centers.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart shows that the stock was trading within a falling wedge pattern during the past several months. This is marked in the daily chart in purple color. Currently, the stock has broken out of this falling wedge pattern. A breakout from a bullish pattern like Falling Wedge Pattern shows that the stock has gained momentum and has the potential to move further up.
CANO – Daily Chart
#2 Trading Above MA: The stock is currently trading above its 50-day moving average, indicating a bullish bias for the stock in the short term.
#3 Bullish Stoch: The daily chart shows that the %K line of the stochastic is above the %D line, indicating possible bullishness.
#4 Bullish ADX and DI: The ADX indicator shows bullishness, as the (+DI) line is currently above the (-DI) line, and the ADX line is currently moving higher from below the (+DI) and (-DI) lines.
#5 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of a short-term downtrend which is marked as a pink color line. This is a possible bullish sign.
CANO – Weekly Chart
#7 Bullish Stoch: In the weekly chart as well, the %K line of the stochastic is above the %D line, and is also moving higher from oversold levels, indicating possible bullishness.
#8 Bullish RSI: The weekly chart shows that the RSI is moving higher from oversold levels, indicating bullishness.
Recommended Trade (Based on the Charts)
Buy Price: If you want to get in on this trade, the ideal buy level for CANO is above the price of $7.05. However, those with a higher risk appetite can purchase half the intended quantity of shares of CANO above the price of $6.70.
TP: Our target prices are $9.80 and $12.50 in the next 4 to 5 months based on the falling wedge pattern breakout.
SL: To limit risk, place a stop loss below $5.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 39% to 77% in the next 4-5 months.
For a risk of $1.75, our first target reward is $2.75 and the second target reward is $5.45. This is a nearly 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 falling wedge pattern breakout level. 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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