The global provider of microwave networking solutions and the leading expert in wireless transport solutions, Aviat Networks Inc. (NASDAQ: AVNW) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Above Resistance Area: As seen from the daily chart, the stock has currently broken out of a long-term resistance level, which is marked as a pink color dotted line. Whenever a stock breaks out of a resistance level, it usually starts to act as a support level. This is a possible bullish indication.
Daily Chart – AVNW
#2 Trading Above MAs: The stock is currently trading above both its short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA, which implies that the bulls are currently in control.
#3 Bullish MACD: The MACD line (light blue color) is currently above the MACD signal line (orange color) in the daily chart, indicating possible bullishness.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is currently greater than (-DI), and ADX has started to move up from below (-DI) and (+DI).
#5 Bullish Aroon: The daily chart shows that the value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30.
This indicates possible bullishness.
#6 Price above previous lower high: The weekly chart shows that the stock is currently trading above the previous lower high price, marked as a blue ellipse. This implies that the stock is breaking out of the prevailing downtrend, which is a possible bullish indication.
Weekly Chart – AVNW
#7 Bullish Stoch: The weekly chart shows that the %K (blue color) line is currently above the %D (orange color) line. This indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for AVNW is if it corrects to the resistance-turned-support level of around $14.80. However, you can purchase half the intended quantity of shares of AVNW if it trades above $15.90.
TP: Our target prices are $19 and $24 in the next 3-5 months.
SL: To limit risk, place a stop loss near $12.20 (for entry near $14.80) and $13.80 (for entry near $15.90). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 20% to 62% in the next 3-5 months.
- Entry near $14.80: For a risk of $2.60, the target rewards are $4.20 and $9.20. This is a nearly 1:2 and 1:4 risk-reward trade.
- Entry near $15.90: For a risk of $2.10, the target rewards are $3.10 and $8.10. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the support level. 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