The California-based company that owns and leases specialized industrial real estate assets, and focuses on the acquisition, disposition, construction, development, and management of industrial facilities leased to tenants in the regulated medical-use cannabis industry, Innovative Industrial Properties Inc. (NYSE: IIPR) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart of IIPR shows that the stock was trading within a downtrend channel during the past few months. This pattern is marked in the daily chart in purple color. The stock has currently broken out from it. Once the stock moves breaks out from a downtrend channel, it has the potential to move further up.
Daily Chart – IIPR
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /]#3 Price above MA: The price is currently above the short-term moving average of 50-day SMA.
This usually implies a possible bullish bias for the stock.
#4 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart. This is a possible bullish indication.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. IIPR has taken support at the 50% Fibonacci support level of the upmove, as seen in the weekly chart. This is a possible bullish sign.
Weekly Chart – IIPR
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart as well. This indicates possible bullishness
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for IIPR is above the resistance level of $90. This is marked as a green dotted line in the daily chart.
However, for those with a higher risk appetite, you can purchase half the intended quantity of shares of IIPR if it opens above yesterday’s close. This translates to a price of $81.65.
TP: Our target prices are $100 and $110 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $83.60 (for entry near $90) and $76.30 (for entry near $81.65). Note that this stop loss is on a closing basis.
Our target potential upside is almost 11% to 35% in the next 4-6 months.
- Entry near $81.65: For a risk of $5.35, our first target reward is $18.35 and the second target reward is $28.35. This is a nearly 1:3 and 1:5 risk-reward trade.
- Entry near $90: For a risk of $6.40, our first target reward is $10.00 and the second target reward is $20.00. This is a nearly 1:2 and 1:3 risk-reward trade.
Overall, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the downtrend channel. 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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