The American multinational ride-hailing company offering services that include peer-to-peer ridesharing, ride service hailing, food delivery, and a micromobility system with electric bikes and scooters, Uber Technologies Inc. (NYSE: UBER) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart of UBER, the stock has been forming a falling wedge pattern for the past several weeks. This pattern is marked in purple color in the daily chart. The stock had typically taken support at the bottom of the wedge before bouncing back. Currently, it has broken out of the falling wedge pattern, indicating possible bullishness.
Daily Chart – UBER
#2 %K above %D: The %K line of the stochastic is currently above the %D line in the daily chart, indicating bullishness. The stochastic is also moving up from near oversold levels, indicating that a possible bullish reversal is around the corner.
[hana-code-insert name=’adsense-article’ /]#3 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.
#4 Bullish ADX and DI: The ADX indicator shows bullishness in the daily chart because (+DI) is greater than (-DI), and ADX is starting to move up from below (-DI) and (+DI).
#5 Price above MAs: The price is currently above the short-term moving average of 50-day SMA.
This usually implies a possible bullish bias for the stock.
#6 Stoch-Price positive divergence: In the weekly chart, there is a Stoch-Price positive divergence. The Stochastic made a higher low while the price made a lower low. This is marked on the chart as purple color dotted lines. This indicates that the selling pressure is reducing and the stock may move higher.
Weekly Chart – UBER
#7 Above Support Area: The weekly chart shows that the stock is currently trading above a resistance-turned-support level. This is marked as a green dotted line. This seems like a good area for a reversal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of UBER if it opens above yesterday’s close. This translates to a price of around $30.10.
TP: Our target prices are $36 and $43 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $26.70. Note that the stop loss is on a closing basis.
Our target potential upside is 20% to 43% in the next 3-6 months.
For a risk of $3.40, our first target reward is $5.90 and the second target reward is $12.90. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x 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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