The worldwide provider of satellite communication and Internet services through its Hughes Network Systems and EchoStar Satellite Services business segments, Echostar Corporation (NASDAQ: SATS) seems poised for a price surge according to its latest charts.

Bullish Indications

#1 Breakout from Downtrend Channel: The daily chart shows that the stock was trading within a downtrend channel for the past several weeks. This is marked as purple color lines in the chart. Even though this is typically a bearish pattern, a breakout from the upper rail of this pattern is considered a good bullish indication. Currently, the stock has broken out of the upper rail of this downtrend channel, indicating possible bullishness.

Daily Chart – SATS

#2 Above MA: The stock is currently trading above its short-term moving average of 50-day SMA. This is a possible bullish sign.

#3 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX is rising higher from below both (+DI) and (-DI).

#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.

#5 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the daily chart. It is also moving up from oversold levels. This usually indicates bullishness.

#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. This downtrend line is marked as a pink color line. This is a bullish sign.

Weekly Chart – SATS

#7 Bullish Stoch: In the weekly chart, the %K line (light blue color) has currently crossed above the %D line (orange color). This is also a possible bullish sign.

#8 Bullish RSI: In the weekly chart, the RSI is currently above 50 and moving higher after reaching oversold levels. This indicates possible bullishness.

#9 Bullish MACD: The weekly chart also shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This indicates possible bullishness.

Recommended Trade (based on the charts)

Buy Price: If you want to get in on this trade, you can purchase the shares of SATS above yesterday’s close, which translates to a price of around $25.50.

T: Our target prices are $30 and $35 in the next 4-6 months.

SL: To limit risk, place a stop loss at $22.50. Note that this stop loss is on a closing basis.

Our target potential upside is 18% to 37% in the next 4-6 months.

For a risk of $3.00, our target rewards are $4.50 and $9.50. 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 breakout level of the downtrend channel. 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

[the_ad id=”102782″]