The physician-centric integrated population health management company that provides medical care services, Apollo Medical Holdings Inc. (NASDAQ: AMEH) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern: AMEH’s daily chart shows that the stock has been recently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. 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.
Daily Chart – AMEH
#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 is above the %D line of the stochastic, indicating possible bullishness.
#4 MACD above Signal Line: In the daily chart, the MACD line is above the MACD signal line which is a possible bullish signal.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX is starting to rise from below both (+DI) and (-DI).
#6 IH&S Pattern: From the weekly chart, we can see that the stock has been consolidating in the form of an Inverted Head and Shoulders (IH&S) pattern. This is marked in the chart in orange color. An IH&S pattern is a bullish pattern. A breakout from an IH&S pattern is usually the sign of an upcoming bullish move. The stock currently looks poised for a breakout from the IH&S pattern.
Weekly Chart – AMEH
#7 Bullish MACD: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#9 Price above MAs: The stock is currently trading above its short-term moving average of 50-week SMA as well as the longer-term moving average of 200-week SMA. All these are possible bullish indications.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the recommended buy level is once the stock breaks out of the ascending triangle pattern. This translates to a price of around $20.
TP: Our target prices are $25 and $30 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $17. Note that this stop loss is on a closing basis.
Our target potential upside is 25% to 50% in the next 4-6 months.
For a risk of $3.00, the target rewards are $5.00 and $10.00. 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 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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