Adapthealth Corp (NASDAQ: AHCO) seems to be poised for a price surge as per its latest charts. The company provides home medical equipment (HME), medical supplies, and home and related services in the United States.
The company provides sleep therapy equipment, supplies, and related services, such as CPAP and bi-PAP services; medical devices and supplies, including continuous glucose monitors and insulin pumps; HME; oxygen and related chronic therapy services in the home; and other HME devices and supplies.
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.
AHCO – Daily Chart
#2 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) and is also moving higher from oversold levels. This is typically considered bullish.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#4 Bullish RSI: The RSI is currently above 50 and moving higher in the daily chart. This indicates possible bullishness.
#5 Above Support Area: As you can see from the daily chart, the stock has currently moved up from a resistance-turned-support level. This is marked as a pink dotted line. This looks like a good area for the stock to move higher.
AHCO – Weekly Chart
#6 %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 RSI: In the weekly chart, the RSI is currently nearing 50 and moving higher. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ACHO above the price of around $15.40.
TP: Our target prices are $18 and $22 in the next 3-6 months.
SL: To limit risk, place stop-loss at $13.90. Note that the stop-loss is on a closing basis.
Our target potential upside is 17% to 43% in the next 3 to 6 months.
For a risk of $1.50, our target rewards are $2.60 and $6.60. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the breakout level of 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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