Surface Oncology Inc. (NASDAQ: SURF) seems to be poised for a price surge as per its latest charts. Surface Oncology, Inc. is a clinical-stage immuno-oncology company that engages in the development of cancer therapies in the United States.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, SURF was trading within a falling wedge pattern during the past several months. This is marked in the daily chart in purple color lines. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up. Currently, the stock has broken out of the falling wedge pattern, indicating bullishness.
SURF – Daily Chart
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
#3 Above MA: The stock is currently trading above its 50-day SMA. This implies that the bulls are currently gaining an upper hand.
#4 Bullish Stochastic: The %K line (blue color) is above the %D line (orange color) in the stochastic, indicating bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and ADX line are above the -DI line, and the ADX line is moving higher from below the +DI and -DI lines.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. SURF had taken support near the 23.6% Fibonacci support level before moving higher, as seen in the weekly chart. This seems like a good area for the stock to bounce upwards.
SURF – Weekly Chart
#7 Bullish Stochastic: The %K line is currently above the %D line in the weekly chart as well, indicating possible bullishness.
#8 Broken Downtrend: The stock has currently broken out from the prevailing downtrend. The downtrend line is marked in pink color. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of SURF above the price of $9.30. This level is marked as a green color dotted line.
TP: Our target prices are $12 and $16 in the next 4-6 months.
SL: To limit risk, place stop-loss below $7.70. Note that the stop loss is on a closing basis.
Our target potential upside is 29% to 72% in the next 4 to 6 months.
For a risk of $1.60, our target rewards are $2.70 and $6.70. This is an almost 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 from the falling wedge pattern with a high volume. 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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