Coherent Corp. (NYSE: COHR) seems to be poised for a price surge as per its latest charts. The company develops, manufactures, and markets engineered materials, optoelectronic components, and devices worldwide. It operates in two segments, Compound Semiconductors and Photonic Solutions.
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been trading within a downtrend channel during the past few weeks. This is marked in the daily chart in purple color. Currently, the stock has broken out of the downtrend channel and is moving higher. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
#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 still in control. This is a positive indication.
#3 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.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 Bullish RSI: The RSI is currently above 50 and moving higher. This indicates possible bullishness.
#6 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 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.
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well. This is a possible bullish indication.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of COHR above the price of around $51.40.
TP: Our target prices are $62 and $67 in the next 3-6 months.
SL: To limit risk, place stop-loss at $46.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 21% to 30% in the next 3 to 6 months.
For a risk of $5.40, our target rewards are $10.60 and $15.60. 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.
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