Enovix Corporation (NASDAQ: ENVX) seems poised for a price surge based on its latest charts. The company designs, develops, and manufactures lithium-ion batteries. It serves wearables and IoT, smartphone, laptops and tablets, industrial and medical, and electric vehicles industries.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock had recently formed a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as purple color lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock has broken out of the symmetrical triangle pattern which is a possible bullish sign.
ENVX – Daily Chart
#2 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.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#4 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.
ENVX – Weekly Chart
#5 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well, and is also moving higher from oversold levels. This is a possible bullish indication.
#6 Bullish RSI: In the weekly chart, the RSI is currently nearing 50 and moving higher. This is a possible bullish sign.
#7 Positive OBV: The weekly chart shows that the OBV indicator is currently rising. OBV rises when volume on up weeks outpaces volume on down weeks. A rising OBV typically reflects positive volume pressure that can lead to higher prices.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of ENVX above the price of around $10.20.
TP: Our target prices are $13 and $15 in the next 3-6 months.
SL: To limit risk, place stop-loss at $8.60. Note that the stop-loss is on a closing basis.
Our target potential upside is 28% to 47% in the next 3 to 6 months.
For a risk of $1.60, our target rewards are $2.80 and $4.80. 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 symmetrical 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
Quickly Know When to Buy, Hold and Sell Stocks Correctly with FAST Graphs -- 25% OFF! [sponsor]Everyone wants to know when to buy, sell, or hold a stock. FAST Graphs reveals this by clearly illustrating the value of the business relative to its stock price. Get 25% off using Trades of the Day's special referral link and coupon code AFFILIATE25