Snap Inc. (NYSE: SNAP) seems to be poised for a price surge as per its latest charts. SNAP operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight that enable people to communicate visually through short videos and images.

Bullish Indications

#1 Falling Wege Pattern: As you can see from the weekly chart, the stock was trading within a falling wedge pattern during the past few months. This is marked in the chart in purple color. Currently, the stock looks poised for a breakout from the falling wedge pattern.

SNAP – Daily Chart

#2 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.

#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 –DI and +DI lines. This indicates possible bullishness.

#4 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 pink dotted line. This looks like a good area for the stock to move higher.

SNAP – Weekly Chart

#5 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart and is also moving higher from oversold levels. This is a possible bullish indication.

#6 Bullish RSI: In the weekly chart, the RSI is currently nearing 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 SNAP above the price of around $8.10. Alternatively, you can purchase the shares of SNAP if it corrects to the price of around $7.50.

TP: Our target prices are $9.80 and $11.00 in the next 3-6 months.

SL: To limit risk, place stop-loss at $7.10 (for entry near $8.10) and $6.30 (for entry near $7.50). Note that the stop-loss is on a closing basis.

Our target potential upside is 21% to 47% in the next 3 to 6 months.

  • Entry near $8.10: For a risk of $1.00, our target rewards are $1.70 and $2.90. This is a nearly 1:2 and 1:3 risk-reward trade.
  • Entry near $7.50: For a risk of $1.20, our target rewards are $2.30 and $3.50. 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 falling wedge pattern with 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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