Applovin Corp (NASDAQ: APP) seems to be poised for a price surge as per its latest charts. The company engages in building a software-based platform for mobile app developers to enhance the marketing and monetization of their apps in the United States and internationally.
Bullish Indications
#1 Falling Wedge Pattern: 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 currently looks poised for a breakout from the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
APP – 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) which is typically considered bullish.
#3 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.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 Bullish Engulfing Pattern: As you can see from the weekly chart, the stock has currently formed a bullish engulfing pattern, which is a bullish reversal pattern. This is marked as a pink color ellipse. A bullish engulfing pattern is a candlestick pattern that forms when a small red candlestick is followed by a large green candlestick, the body of which completely overlaps or engulfs the body of the previous candlestick.
APP – Weekly Chart
#6 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly chart as well, indicating bullishness.
#7 Bullish RSI: In the weekly chart, the RSI is currently moving higher from oversold levels. 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 APP above the price of around $42.00.
TP: Our target prices are $51 and $56 in the next 3-6 months.
SL: To limit risk, place stop-loss at $37. Note that the stop-loss is on a closing basis.
Our target potential upside is 21% to 33% in the next 3 to 6 months.
For a risk of $5.00, our target rewards are $9.00 and $14.00. 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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