The semiconductor intellectual property company, headquartered in Mountain View, California and specializes in digital signal processor technology, CEVA, Inc. (NASDAQ: CEVA) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical triangle pattern breakout: CEVA’s daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. This is marked on the daily chart in purple color. A breakout from a symmetrical triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level.
Daily Chart – CEVA
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
#3 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 as a bullish bias.
#4 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of a short-term downtrend and started a new uptrend. The downtrend line is marked in purple color in the weekly chart below. A break out from downtrend is usually a bullish sign.
Weekly Chart – CEVA
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
#8 MACD above Signal Line: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal.
#9 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly chart as well. This is also a possible bullish sign.
#10 Near support area: The weekly chart shows that the stock is above a strong support area. This is marked as green dotted line. This also indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CEVA is if it trades above yesterday’s close. This translates to a price of around $34.90
TP: Our target prices are $40 and $45 in the next 3-5 months.
SL: To limit risk, place a stop loss at $31.80. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 15% to 30% in the next 4-6 months.
For a risk of $3.10, the target rewards are $5.10 and $10.10. 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 with high volume from the symmetrical triangle pattern. 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 its sector.
Happy Trading!
Tara
This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.