The computer software and services company founded in 1985 and headquartered outside of Boston, Massachusetts, PTC Inc. (NASDAQ: PTC) shows signs of an upcoming price surge after a slight correction according to its latest charts.
Bullish Indications
#1 Uptrend Channel: The daily chart of PTC shows that the stock has been trading within an uptrend channel for the past few months. This channel is marked in the daily chart in blue color. Currently, the stock is trading near the middle of this channel. This shows that the stock has gained momentum and has the potential to move up.
Daily Chart – PTC
#2 IH&S Breakout in Daily chart: As you can see from the daily chart, the stock has recently broken out of an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in orange color. An IH&S pattern is a strong bullish pattern and indicates that the stock may move higher in the short term.
[hana-code-insert name=’adsense-article’ /] #3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.#4 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#5 Strong RSI: RSI is above 50 and moving up, indicating strength.
#6 Strong Support Level: There is a very strong support level close by for the stock.
This is marked as a pink dotted line.
This level is the breakout level of the IH&S pattern, support level of the uptrend channel, as well as the long-term resistance-turned-support level for the stock. This looks like a good area for the stock to bounce back after a correction.
#7 Flag Pattern Breakout: As seen from the weekly chart, the stock was in a strong uptrend after which it started consolidating. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in purple color in the weekly chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case. The stock has currently broken out of the flag pattern, which is a bullish sign.
Weekly Chart – PTC
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates bullishness.
#9 %K above %D: The stochastics show that the %K line is currently above the %D line in the weekly chart. This is a bullish sign.
A short-term correction seems to be imminent before the next upmove due to overbought stochastic in the daily chart.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of PTC if it pulls back to the breakout level of the IH&S pattern. This translates to a price of around $100.
TP: Our target prices are $115 and $130.
SL: To limit risk, place a stop loss at $94.80. Note that this stop loss is on a closing basis.
Our target potential upside is almost 15% to 30% in the next 3-6 months.
For a risk of $5.20, our target rewards are $15.00 and $30.00. This is almost 1:3 and 1:6 risk-reward trade.
In other words, this trade offers nearly 3x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the Inverted Head and Shoulders 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
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