Cano Health Inc. (NYSE: CANO) shows signs of an upcoming price surge according to its latest charts. The company provides primary care medical services to its members in the United States and Puerto Rico. It owns and operates medical centers enabled by CanoPanorama, a proprietary population health management technology-powered platform.
#1 Consolidation Area: The daily chart shows that the stock has been trading within a consolidation area for the past several months. This is marked in the daily chart as an orange color rectangle. Once a stock breaks out from a consolidation area, it usually moves higher.
#2 Above MAs: The stock is currently trading above its short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls currently have an upper hand.
#3 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the daily chart, indicating bullishness.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line and the ADX line are greater than (-DI), and ADX has started to move up from below the (-DI) and (+DI) lines.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of its short-term downtrend and started a new uptrend. The downtrend line is marked in pink color. This seems like a possible bullish indication.
#7 Bullish MACD: In the weekly chart, the MACD line is currently above the MACD signal line. This is a possible bullish indication.
#8 Bullish ADX and DI: The weekly chart shows that the +DI line is above the -DI line, and the ADX line is starting to move higher from below the +DI and -DI lines. This is a possible bullish sign.
#9 %K above %D: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart as well. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of CANO if it trades above the price of around $7.15.
TP: Our target prices are $9.00 and $10.00 in the next 2-6 months.
SL: To limit risk, place a stop loss at $6.10. Note that this stop loss is on a closing basis.
Our target potential upside is almost 26% to 40% in the next 2-6 months.
For a risk of $1.05, our target rewards are $1.85 and $2.85. This is almost 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 with high volume from the consolidation area. 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.
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