LYFT Inc. (NASDAQ: LYFT) seems to be poised for a price surge as per its latest charts. The company operates a peer-to-peer marketplace for on-demand ridesharing in the United States and Canada.
Bullish Indications
#1 Downtrend Channel: As you can see from the daily chart, the stock has been trading within a downtrend channel for the past few months. This is marked in the daily chart in purple color. Currently, the stock seems poised for a breakout from the trend channel. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
LYFT – Daily Chart
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA, indicating that the bulls are gaining control. This is a positive indication.
#3 Bullish ADX: The ADX indicator shows that the +DI line has currently crossed above the –DI line and the ADX line is starting to move higher 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 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a pink dotted line. This looks like a good area for the stock to move higher.
LYFT – 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 MACD: The MACD line is above the MACD signal line in the weekly chart, indicating bullishness.
#8 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, the ideal buy level for LYFT is above the price of around $20.50. However, those with a higher risk appetite can purchase the shares of LYFT above the price of around $18.00.
TP: Our target prices are $27 and $32 in the next 3-6 months.
SL: To limit risk, place stop-loss at $16.70 (for entry near $20.50) and $14.50 (for entry near $18). Note that the stop-loss is on a closing basis.
Our target potential upside is 32% to 78% in the next 3 to 6 months.
- Entry near $20.50: For a risk of $3.80, our target rewards are $6.50 and $11.50. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $18.00: For a risk of $3.50, our target rewards are $9.00 and $14.00. This is a nearly 1:3 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 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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