Calix Inc. (NYSE: CALX) seems to be getting ready for a price bump as per the latest charts. The company’s cloud and software platforms, and systems and services enable broadband service providers (BSPs) to provide a range of services.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock had recently formed a falling wedge pattern. These are marked as purple color lines. The stock has currently broken out of the falling wedge pattern with high volume 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.
CALX – Daily Chart
#2 Price above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating that the bulls are firmly in control.
#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 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 38.2% Fibonacci support level before moving higher, as seen in the weekly chart. The stock is also trading above its 50-week and 200-week SMA, indicating bullishness.
CALX – Weekly Chart
#7 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
#8 Bullish RSI: In the weekly chart as well, 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, the ideal buy price for CALX is if the stock closes above the price of $51.10.
TP: Our target prices are $57 and $61 in the next 4-6 months.
SL: To limit risk, place a stop loss below $47.70. Note that the stop loss is on a closing basis.
Our target potential upside is 12% to 19% in the next 4-6 months.
For a risk of $3.40, our first target reward is $5.90 and the second target reward is $9.90. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 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 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 energy sector.
Happy Trading!
— Tara
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