The British American electric vehicle manufacturer headquartered in London, UK, primarily lightweight commercial vehicles, which recently announced a new passenger bus designed for coronavirus-era social distancing, Arrival SA (NASDAQ: ARVL) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Downtrend Channel Breakout: The daily chart shows that the stock was trading within a downtrend channel for the past few months. This channel is marked in the daily chart in pink color. Currently, the stock has broken out of this channel with high volume, indicating that it has the potential to surge ahead.
Daily Chart – ARVL
#2 Above MA: The stock is currently trading above its short-term moving average of 50-day SMA. This indicates the overall bullishness of the stock.
#3 Bullish RSI: The RSI is currently above 50 and moving higher, which shows the strength of the current upmove.
#4 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the daily chart. It is also moving higher from oversold levels. All these indicate possible bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness as the (+DI) line is above the (-DI) line and the ADX line has started to move higher from below the (+DI) and (-DI) lines.
#6 Fibonacci Support: The weekly chart shows that the stock had bounced back higher after taking support at the 23.6% Fibonacci level and is currently above the 38.2% Fibonacci level. The stock is also trading above its 50-week SMA. All these are possible bullish signs.
Weekly Chart – ARVL
#7 Bullish RSI: The RSI is currently above 50 and moving higher in the weekly chart as well. This is a possible bullish sign.
#8 Other bullish indications: In the weekly chart, the ADX indicator shows bullishness as the (+DI) line has crossed above the (-DI) line. The stochastic indicator also shows bullishness as the %K line has crossed above the %D line. All these indicate 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 ARVL above yesterday’s high. This translates to a price of around $20.75.
TP: Our target prices are $25 and if it closes above that level, $30 in the next 3-6 months.
SL: To limit risk, place a stop loss at $18.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 21% to 45% in the next 3-6 months.
For a risk of $2.25, our target rewards are $4.25 and $9.25. This is an almost 1:2 and 1:4 risk-reward trade. In other words, this trade offers 2x to 4x rewards when compares to risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from 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
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