The emerging growth company, which engages in the production and distribution of video content, Chicken Soup for The Soul Entertainment Inc. (NASDAQ: CSSE) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock was recently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level. Currently, the stock has broken out of the ascending triangle pattern, which is usually a bullish sign.
Daily Chart – CSSE
#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 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#4 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX lines are also currently above –DI line. All these indicate possible bullishness.
#5 MACD above signal line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), which is a possible bullish sign.
#6 IH&S Pattern Breakout: The weekly chart shows that the stock was forming an inverted head and shoulders pattern. This pattern is marked in the chart in orange color. A breakout from a bullish pattern like IH&S pattern indicates the possibility of an upmove. Currently, the stock has broken out of the IH&S pattern, indicating possible bullishness.
Weekly Chart – CSSE
#7 Bullish MACD: As you can see from the weekly chart as well, the MACD line (blue color) is currently above the signal line (orange color). The stock is also trading above its 50-day SMA. These are all bullish indications.
#8 Bullish ADX and DI: In the weekly chart as well, the +DI line is above the -DI line, and the ADX line has started to move higher from below the +DI and -DI lines. All these are possible bullish indications.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CSSE if it trades above yesterday’s close. This translates to a price of $11.05.
TP: Our target prices are $14 and $18 in the near-term.
SL: To limit risk, place a stop loss near $9.10. Note that this stop loss is on a closing basis.
Our target potential upside is 27% to 63% in the next 3-6 months.
For a risk of $1.95, the target rewards are $2.95 and $6.95. 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 ascending 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
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