Micron Technology, Inc. (NASDAQ: MU) seems to be poised for a price surge as per its latest charts. The company designs, develops, manufactures, and sells memory and storage products worldwide. It operates through four segments: Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit.
Bullish Indications
#1 Ascending Triangle Pattern: The daily chart shows that the stock has been forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. The stock currently looks poised for a breakout from the ascending triangle pattern. A breakout from this pattern typically indicates bullishness. The base of the triangle also acts as a good support level after the breakout.
MU – Daily Chart
#2 Price above MA: The price is currently above the longer-term moving average of the 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 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 the –DI and +DI lines. This indicates possible bullishness.
#4 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#5 Bullish RSI: The RSI is currently nearing 50 and moving higher in the daily chart. This is a possible bullish sign.
#6 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher. The ADX indicator also shows bullishness as the +DI line is above the -DI line.
MU – Weekly Chart
#7 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
#8 Bullish RSI: In the weekly chart, the RSI is currently nearing 50 and moving higher. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of MU above the price of around $59.50.
TP: Our target prices are $65 and $69 in the next 3-6 months.
SL: To limit risk, place stop-loss at $56.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 9% to 16% in the next 3 to 6 months.
For a risk of $3.00, our target rewards are $5.50 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 from the ascending triangle 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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