The provider of alternative and renewable energy technology based in Reno, Nevada, Ormat Technologies, Inc. (NYSE: ORA) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart of ORA shows that the stock was trading within a falling wedge pattern during the past several months. This is marked in the daily chart in orange color. Currently, the stock has broken out of this falling wedge pattern. A breakout from a bullish pattern like Falling Wedge Pattern shows that the stock has gained momentum and has the potential to move further up.
Daily Chart – ORA
#2 Double Bottom: The stock is currently forming a double bottom pattern. This is marked in the daily chart in pink color. This is a bullish reversal pattern and the breakout from it would indicate that the stock could possibly move upwards.
[hana-code-insert name=’adsense-article’ /]#3 Trading Above MA: The stock is currently trading above its 50-day moving average (light blue line), indicating a bullish bias for the stock in the short term.#4 Bullish Reversal Candlestick: The latest candlestick is a hammer, indicating a possible reversal to the upside.
#5 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color).
This indicates a possible bullish setup.
#6 Bullish Stochastic: The %K line is above the %D line of the stochastic, indicating bullishness.
#7 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. ORA has taken support at the 50% Fibonacci support level of the upmove, as seen in the weekly chart. This seems like a good level to bounce back upwards.
Weekly Chart – ORA
#8 MACD crossover: In the weekly chart, the MACD line has crossed above the MACD signal line. This is also a possible bullish sign.
#9 CCI moving up: CCI is currently moving up from below -100, indicating bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of stock at the current price of $53.72 and the rest if the stock corrects to $50.
TP: Our target prices are $60 and $70 in the next 3 to 5 months based on the falling wedge pattern breakout.
SL: To limit risk, place a stop loss below $48.50. Note that this stop loss is on a closing basis.
Our target potential upside is almost 20% to 40% in the next 3-5 months.
- Entry at $50: For a risk of $1.50, our first target reward is $10 and the second target reward is $20. This is a nearly 1:7 and 1:13 risk-reward trade.
- Entry at $53.72: For a risk of $5.22, our target reward (TP#2) is $16.28. This is a 1:3 risk-reward trade.
In other words, this trade offers nearly 3x to 13X more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge pattern breakout level. 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
[hana-code-insert name=’TOD webinar’ /]