Sotera Health Co. (NASDAQ: SHC) seems to be poised for a price surge as per its latest charts. The company provides sterilization, lab testing, and advisory services in the United States, Canada, Europe, and internationally.
The company’s sterilization services include gamma and electron beam irradiation and EO processing; Nelson Labs comprise microbiological and analytical chemistry testing; and advisory services for medical device and biopharmaceutical industries.
Bullish Indications
#1 Consolidation area: The daily chart shows that the stock was consolidating within a price range for the past few days. This area is marked as a pink color rectangle. The stock currently looks poised for a breakout from this consolidation area. Once the stock breaks out of the consolidation area with high volume, it could surge higher.
SHC – 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 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 the –DI and +DI lines. This indicates possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a strong support level. This level is marked as a purple dotted line. This looks like a good area for the stock to move higher.
SHC – Weekly Chart
#7 %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.
#8 Oversold 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 shares of SHC above the price of around $8.20.
TP: Our target prices are $9.60 and $11.00 in the next 3-6 months.
SL: To limit risk, place stop-loss at $7.40. Note that the stop-loss is on a closing basis.
Our target potential upside is 17% to 34% in the next 3 to 6 months.
For a risk of $0.80, our target rewards are $1.40 and $2.80. This is a nearly 1:2 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 consolidation area 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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