The precious metals mining company Coeur Mining Inc. (NYSE: CDE) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Consolidation Area Breakout: The daily chart shows that the stock was trading within a consolidation area for the past several months. This is marked in the daily chart as a purple color rectangle. Currently, the stock has broken out of this consolidation area with a high volume. Once a stock breaks out from a consolidation area, it usually moves higher.
Daily Chart – CDE
#2 Above MAs: The stock is currently trading above its short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating the overall bullishness of the stock.
#3 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). This indicates a possible bullish bias.
#4 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.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line and the ADX line are greater than (-DI), and ADX has started to move up from below (-DI) and (+DI) lines.
#6 Double Bottom Pattern: The weekly chart shows that the stock has been forming a double bottom pattern, which is marked in pink color. Once a breakout from a bullish pattern like a double bottom pattern occurs, the stock usually moves higher.
Weekly Chart – CDE
#7 Bullish MACD: In the weekly chart as well, the MACD line is currently above the MACD signal line. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of CDE if it trades above yesterday’s close. This translates to a price of around $11.50.
The rest of the shares can be purchased if the stock corrects to the breakout level of the consolidation area, at around $9.00, or if the stock reaches near the breakout level of the double bottom pattern, at around $15.00.
TP: Our target prices are $15 and $20 in the next 3-6 months.
SL: To limit risk, place a stop loss at $6.80 (for entry near $9.00), $9.10 (for entry near $11.50), and $12.00 (for entry near $15). Note that this stop loss is on a closing basis.
Our target potential upside is almost 30% to 122% in the next 3-6 months.
- Entry near $9.00: For a risk of $2.20, our target rewards are $6.00 and $11.00. This is almost 1:3 and 1:5 risk-reward trade.
- Entry near $11.50: For a risk of $2.40, our target rewards are $3.50 and $8.50. This is almost 1:2 and 1:4 risk-reward trade.
- Entry near $15.00: For a risk of $3.00, our target reward (TP#2) is $5.00. This is an almost 1:2 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the consolidation area. 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 the sector.
Happy Trading!
— Tara