The American multinational corporation that provides services to oil and gas companies, Oil States International, Inc. (NYSE: OIS) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, OIS has been trading within a falling wedge pattern during the past few months. This is marked in the daily chart in purple color. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up. Currently, the stock has broken out of the falling wedge pattern, indicating bullishness.
Daily Chart – OIS
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
[hana-code-insert name=’adsense-article’ /] #3 Above MAs: In the daily chart of OIS, the stock is currently trading above both 50-day as well as 200-day SMA.This implies that the bulls are currently in control. These levels also act a good support.
#4 Symmetrical Triangle Pattern Breakout: The daily charts also shows that a symmetrical triangle pattern breakout has occurred.
This is marked in pink color dotted lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern. This is a bullish sign.
#5 Bullish Indicators: The CCI, as well as RSI, shows bullishness, as they have been moving higher after reaching oversold levels.
#6 Downtrend Broken, New Uptrend in Weekly Chart: As evident from the weekly chart, the downtrend of the stock has now been broken. This is a bullish sign. The stock has also started a new uptrend. The downtrend line is marked in purple color and the uptrend line is marked in green color.
Weekly Chart – OIS
#6 Strong RSI: The RSI is above 50 and moving up. This is a bullish sign.
#7 Bullish Stochastic: The weekly chart shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of OIS at the current price of $33.45.
TP: Our target prices are $40 and $50 in the next 3-5 months.
SL: To limit risk, place stop-loss at $31.50. Note that the stop loss is on a closing basis.
Our target potential upside is 20% to 50% in the next 3-5 months. For a risk of $1.95, our target rewards are $6.55 and $16.55. This is an almost 1:3 and 1:8 risk-reward trade.
In other words, this trade offers nearly 3x to 8x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge 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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