Flex Ltd (NASDAQ: FLEX) seems to be poised for a price surge as per its latest charts. Flex Ltd. is an American Singaporean-domiciled multinational electronics contract manufacturer. It is the third-largest global electronics manufacturing services, original design manufacturer company by revenue.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock has currently broken out of a downtrend channel. This channel is marked in the chart as purple color lines. This is a possible bullish indication.
FLEX – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below –DI and +DI lines. This indicates possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#6 Consolidation Area: The weekly chart shows that the stock has been consolidating within a price range for the past few days. This area is marked as a pink color rectangle. The stock currently looks poised for a breakout. A breakout from a consolidation area typically indicates bullishness and the breakout level acts as a good support area.
FLEX – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for FLEX is above the price of around $19.60. However, you can purchase half the intended quantity of shares of FLEX above the price of around $18.70.
TP: Our target prices are $25 and $28 in the next 3-6 months.
SL: To limit risk, place stop-loss at $15.50 (for entry near $18.70) and $16.50 (for entry near $19.60). Note that the stop-loss is on a closing basis.
Our target potential upside is 27% to 49% in the next 3 to 6 months.
- Entry near $18.70: For a risk of $3.20, our target rewards are $6.30 and $9.30. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $19.60: For a risk of $3.10, our target rewards are $5.40 and $8.40. 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 trend channel 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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