Casa Systems Inc. (NASDAQ: CASA) seems to be poised for a price surge as per its latest charts. The company provides solutions for next-generation physical, virtualized, and cloud native architectures for cable broadband, fixed-line broadband, and wireless networks in North America, Latin America, the Asia-Pacific, Europe, the Middle East, and Africa.
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.
CASA – 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 Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of a short-term downtrend with historic high volume. The downtrend line is shown in pink color. The stock is also trading above its 50-week SMA. All these are possible bullish signs.
CASA – Weekly Chart
#7 %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.
#7 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, you can purchase the shares of CASA above the price of around $7.20. Alternatively, you can purchase the shares of CASA if it corrects to the price of around $6.10.
TP: Our target prices are $9.60 and $12.00 in the next 3-6 months.
SL: To limit risk, place stop-loss at $5.80 (for entry near $7.20) and $4.00 (for entry near $6.10). Note that the stop-loss is on a closing basis.
Our target potential upside is 33% to 97% in the next 3 to 6 months.
- Entry near $7.20: For a risk of $1.40, our target rewards are $2.40 and $4.80. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $6.10: For a risk of $2.10, our target rewards are $3.50 and $5.90. 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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