Hologic, Inc. (NASDAQ: HOLX) seems to be poised for a price surge as per its latest charts. The company is a medical technology company primarily focused on women’s health; it sells medical devices for diagnostics, surgery, and medical imaging.
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.
HOLX – 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 the –DI and +DI lines. This indicates possible bullishness.
#4 Bullish MACD: The MACD line is above the MACD signal line in the daily chart, indicating 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.
#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. The stock is also trading above its 200-week SMA, indicating that the bulls are firmly in control.
HOLX – Weekly Chart
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart 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 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 HOLX is above the price of around $69.50.
TP: Our target prices are $76 and $80 in the next 3-6 months.
SL: To limit risk, place stop-loss at $66.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 9% to 15% in the next 3 to 6 months.
For a risk of $3.50, our target rewards are $6.50 and $10.50. 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 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