The company that develops, manufactures, and sells devices for the surgical ablation of cardiac tissue and systems to medical centers, AtriCure Inc. (NASDAQ: ATRC) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Channel Breakout: As you can see from the daily chart, the stock was trading within an uptrend channel during the past few months. This is marked in the daily chart in pink color. Currently, the stock has taken support at the lower rail of the uptrend channel and started to move higher. This is a possible bullish sign.
Daily Chart – ATRC
#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 is starting to move up from below –DI and +DI lines. The +DI line is 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), indicating a bullish bias.
#6 Flag Pattern Breakout: As you can see from the weekly chart, the stock was in a strong uptrend, after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color lines. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). The stock has currently broken out of the flag pattern, indicating possible bullishness.
Weekly Chart – ATRC
#7 Bullish RSI: The RSI is currently above 50 and moving higher. This indicates the strength of the current bullish move.
#8 Bullish Stoch: The weekly chart also shows that the %K line of the stochastic is above the %D line, and is also moving higher from oversold levels. 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 ATRC if it trades above yesterday’s high. This translates to a price of around $45.
TP: Our target prices are $50 and $55 in the near-term.
SL: To limit risk, place a stop loss near $41.70. Note that this stop loss is on a closing basis.
Our target potential upside is 11% to 22% in the next 3-6 months.
For a risk of $3.30, 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 uptrend channel and flag 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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