Snowflake Inc. (NYSE: SNOW) seems to be poised for a price surge as per its latest charts. The company provides a cloud-based data platform in the United States and internationally. The company’s platform offers Data Cloud, which enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. Its platform is used by various organizations of sizes in a range of industries.
Bullish Indications
#1 Downtrend Channel: As you can see from the daily chart, the stock has been trading within a downtrend channel for the past few months. This is marked in the daily chart in pink color. Currently, the stock has moved higher from the lower rail of the downtrend channel and looks poised for a breakout. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
SNOW – Daily Chart
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA, indicating that the bulls are gaining control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below –DI and +DI lines. This indicates possible bullishness.
#5 Bullish RSI: The RSI is currently above 50 and moving higher in the daily chart, indicating possible bullishness.
#6 Above Support Area: As you can see from the weekly chart, the stock has currently moved up after forming a support area. This level is marked as a purple dotted line. This looks like a good area for the stock to move higher.
SNOW – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart, and is also moving higher from oversold levels. This is a possible bullish indication.
#8 Bullish RSI: In the weekly chart, the RSI is currently moving higher from oversold levels. This is a possible sign of reversal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of SNOW above the price of around $152.
TP: Our target prices are $166 and $174 in the next 3-6 months.
SL: To limit risk, place stop-loss at $144. Note that the stop-loss is on a closing basis.
Our target potential upside is 9% to 15% in the next 3 to 6 months.
For a risk of $8.00, our target rewards are $14.00 and $22.00. 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 from the trend channel 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