Bilibili Inc. (NASDAQ: BILI) seems to be poised for a price surge as per its latest charts. The company provides online entertainment services for the young generations in the People’s Republic of China. Its platform offers a range of content, including video services, mobile games, and value-added services, as well as ACG-related comic and audio content.
The stock was also a part of our recent watchlist for breakout stocks.
Bullish Indications
#1 Channel Breakout: As you can see from the daily chart, the stock was trading within a downtrend channel during the past few months. This is marked in the chart in purple color. Currently, the stock has broken out of the downtrend channel. A breakout from the channel usually indicates that the stock would move higher.
BILI – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are firmly in control. This is a positive indication.
#3 Bullish ADX and DI: The ADX indicator in the daily chart 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.
#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 support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
BILI – Weekly Chart
#6 Bullish MACD: The MACD line (blue color) is above the MACD signal line (orange color) in the weekly chart, indicating bullishness.
#7 Bullish RSI: In the weekly chart, the RSI is currently above 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, you can purchase the shares of BILI above the price of around $27.50.
TP: Our target prices are $33 and $37 in the next 3-6 months.
SL: To limit risk, place stop-loss at $24.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 20% to 35% in the next 3 to 6 months.
For a risk of $3.00, our target rewards are $5.50 and $9.50. 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 breakout level of 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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