e.l.f. Beauty, Inc. (NYSE: ELF) seems to be poised for a price surge as per its latest charts. The company provides cosmetic and skin care products under the e.l.f. Cosmetics, e.l.f. Skin, Well People, and Keys Soulcare brand names worldwide. The company offers eye, lip, face, face, paw, and skin care products.
Bullish Indications
#1 Above Support Area: As you can see from the daily chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a purple color dotted line. This looks like a good area for the stock to move higher.
ELF – Daily Chart
#2 Hammer Candle: The daily chart shows that the stock has currently formed a hammer candlestick. This is marked within an orange color circle.
The hammer candlestick shows that although bears were able to pull the price to a new low, they failed to hold there and by the end of a trading period lost a battle with buyers. The signal is stronger if a hammer forms after a long decline in the price.
The candlestick shows that the price had moved below the support area (purple color dotted line) but reversed strongly to close above the support area. This is usually a sign of an upcoming upmove.
#3 Price above MA: The price is currently above the short-term moving average of the 200-day SMA indicating that the bulls are still in control. This is a positive indication.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart and is also moving higher from oversold levels, indicating possible bullishness.
#5 Oversold RSI: The RSI is currently moving higher after reaching oversold levels. This indicates a possible bullish reversal.
#6 Bollinger Band Reversal: The daily chart shows that the price has broken below the lower band of the Bollinger Bands. This usually indicates that prices have fallen too much and are due to bounce.
#7 Above Strong 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.
ELF – Weekly Chart
#8 Price Above MAs: The stock is currently trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of ELF above the price of around $106.30.
TP: Our target prices are $118 and $125 in the next 3-6 months.
SL: To limit risk, place stop-loss at $99.90. Note that the stop-loss is on a closing basis.
Our target potential upside is 11% to 18% in the next 3 to 6 months.
For a risk of $6.40, our target rewards are $11.70 and $18.70. 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 support 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