U Power Limited (NASDAQ: UCAR) seems to be poised for a price surge as per its latest charts. The company develops, manufactures, and sells new energy vehicles and battery-swapping stations in the People’s Republic of China. It also offers battery swapping and sourcing services.
The company recently entered into a framework strategic cooperation agreement with Quantum Solutions Co., Ltd. Quantum is the first and only independent Japanese electric vehicle manufacturer listed on the Tokyo Stock Exchange.
The agreement will allow U Power to develop business initiatives related to the research and development and marketing of electric vehicles, as well as new energy storage solutions including battery banks, battery-swapping operations, and charging stations in Japan.
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock had recently formed a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as purple color lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock has broken out of the symmetrical triangle pattern with a historic high volume, which is a possible bullish sign.
#2 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has currently moved above the –DI and +DI lines. This indicates possible bullishness.
#3 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#4 Bullish RSI: The RSI is currently moving higher after reaching oversold levels. This indicates possible bullishness.
#5 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a strong support level with historic high volume. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher.
#6 Bullish ADX: The weekly chart of the ADX indicator shows that the +DI line is currently above the -DI line. This is typically a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of UCAR above the price of around $8.90.
TP: Our target prices are $12.00 and $15.00 in the next 3-6 months.
SL: To limit risk, place stop-loss at $7.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 35% to 69% in the next 3 to 6 months.
For a risk of $1.90, our target rewards are $3.10 and $6.10. 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 symmetrical triangle pattern 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.
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