Uber Technologies, Inc. (NYSE: UBER) seems to be poised for a price surge as per its latest charts. The company develops and operates proprietary technology applications. It operates through three segments: Mobility, Delivery, and Freight. The Mobility segment connects consumers with a range of transportation modalities, such as ridesharing, carsharing, micromobility, rentals, public transit, taxis, and other modalities; and offers riders in a variety of vehicle types.
#1 Consolidation area: The daily chart shows that the stock has been consolidating within a price range for the past few weeks. This area is marked as a purple color rectangle. The stock now looks poised for a breakout from this consolidation area. Once the breakout occurs, the level typically acts as a good support area.
#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 Positive OBV: The daily chart shows that the OBV indicator is currently rising. OBV rises when volume on up days outpaces volume on down days. A rising OBV typically reflects positive volume pressure that can lead to higher prices.
#5 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 purple dotted line. This looks like a good area for the stock to move higher. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
#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 shares of UBER above the price of around $50.70.
TP: Our target prices are $55 and $58 in the next 3-6 months.
SL: To limit risk, place stop-loss at $48.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 8% to 14% in the next 3 to 6 months.
For a risk of $2.20, our target rewards are $4.30 and $7.30. 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 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.
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