Bilibili Inc. (NASDAQ: BILI) seems to be poised for a price surge as per its latest charts. Bilibili Inc. provides online entertainment services for the young generations in the People’s Republic of China. Its platform offers a range of content, including video services, mobile games, and value-added services, as well as ACG-related comic and audio content.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock was forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock has currently broken out of the falling wedge pattern and looks poised for an upmove. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
BILI – Daily Chart
#2 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#3 Bullish RSI: The daily chart shows that the RSI is moving higher from oversold levels and is currently nearing 50. This is a possible bullish indication.
#4 Above Support Area: As you can see from the daily chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a pink dotted line. This looks like a good area for the stock to move higher.
BILI – Weekly Chart
#5 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well, and is also moving higher from oversold levels. This is a possible bullish indication.
#6 Bullish Candlestick Pattern: The weekly chart shows that the stock has formed a bullish engulfing candlestick pattern. This is marked as an orange color ellipse in the weekly chart. The Bullish Engulfing pattern is a two-candle reversal pattern. The second candle completely ‘engulfs’ the real body of the first one, without regard to the length of the tail shadows. The bullish engulfing pattern often triggers a reversal in trend as more buyers enter the market to drive prices up further.
#7 Bullish RSI: In the weekly chart, the RSI is moving higher from oversold levels. This indicates that a reversal may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of BILI above the price of around $30.20.
TP: Our target prices are $39 and $44 in the next 3-6 months.
SL: To limit risk, place stop-loss at $25.20. Note that the stop-loss is on a closing basis.
Our target potential upside is 29% to 46% in the next 3 to 6 months.
For a risk of $5.00, our target rewards are $8.80 and $13.80. 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 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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