The international alternative media video streaming service and online community focusing on fringe-science and yoga, Gaia Inc. (NASDAQ: GAIA) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: GAIA’s daily chart shows that the stock had recently broken out of 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. Currently, the stock has retested the breakout level of the ascending triangle pattern, which is a possible bullish sign.
Daily Chart – GAIA
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#3 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart. It is also moving higher from oversold levels. This is a possible bullish indication.
#4 Bullish RSI: The daily chart shows that the relative strength index is currently above 50 and moving higher. This is a possible bullish sign.
#5 Consolidation Area Breakout: The weekly chart shows that the stock was consolidating within a price range for the past several months. This area is marked as a purple color rectangle. The stock has now broken out from this consolidation area and is currently trading above it. The breakout level of this consolidation area typically acts as a good support level.
Weekly Chart – GAIA
#6 MACD above Signal Line: In the weekly chart, the MACD line is above the MACD signal line which is a bullish signal. The stock is also trading above its 50-week as well as 200-week SMA, indicating that the bulls are still in control.
#7 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) and ADX line are greater than (-DI), and the ADX line had risen from below both (+DI) and (-DI).
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the recommended buy level for GAIA is above yesterday’s close, at around $11.80.
TP: Our target prices are $15 and $20 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $9.65. Note that this stop loss is on a closing basis.
Our target potential upside is 27% to 69% in the next 4-6 months.
For a risk of $2.15, the target rewards are $3.20 and $8.20. 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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