The Software-as-a-Service company that gives healthcare organizations a suite of robust applications to manage the patient intake process, Phreesia Inc. (NYSE: PHR) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: PHR’s daily chart shows that the stock had recently formed an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. Currently, the stock has broken out of the ascending triangle pattern with high volume, indicating possible bullishness.
Daily Chart – PHR
#2 Trading Above MAs: The stock is currently trading above both its short-term moving average of 50-day and the long-term moving average of 200-day SMA, which implies that the bulls are currently in control. This is a possible bullish sign.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
#4 Bullish ADX: The ADX line has currently started to move up from below –DI and +DI lines. The +DI line, and the ADX line is also above –DI line. These indicate possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#6 Above Resistance Level: The weekly chart shows that the stock has broken out of a strong resistance level, which is marked as an orange color dotted line. The stock is also trading above its 50-week SMA. All these are possible bullish signs.
Weekly Chart – PHR
#7 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly chart, which is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PHR is if it trades above yesterday’s close, at around $37.50.
Alternatively, you can purchase the shares of PHR is it corrects to the breakout level of the ascending triangle pattern at around $34.00 to 34.50.
TP: Our target prices are $42 and $46 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $34.50 (for entry near $37.50) and $30 (for entry near$34.25). Note that this stop loss is on a closing basis.
Our target potential upside is 12% to 34% in the next 3-5 months.
- Entry near $34.25: For a risk of $4.25, the target rewards are $7.75 and $11.75. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $37.50: For a risk of $3.00, the target rewards are $4.50 and $8.50. 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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