One of the largest home health providers and fourth largest hospice care provider in the United States, Amedisys Inc. (NASDAQ: AMED) show signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Uptrend Channel Support: The daily chart of AMED shows that the stock was trading within an uptrend channel for the past several months. This channel is marked on the daily chart in purple color. The stock is currently moving up within the channel after taking support at the bottom rail of the channel. Once the stock breaks out from this uptrend channel, it has the potential to move further up.
Daily Chart – AMED
#2 Above MAs: The stock is currently trading above its 50-day and 200-day SMA. This shows that the bulls are still in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD Above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color).
This is a possible bullish setup.
#4 Bullish RSI: The RSI has moved up from overbought levels and is currently above 50 and moving up. This indicates possible bullishness.
#5 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Unbroken Uptrend in Weekly Chart: As evident from the weekly chart, the uptrend of the stock is still unbroken as it has been forming higher highs and higher lows for the past several months. The stock is also above its 50-week as well as 200-week SMA. This implies that the bulls are currently in control.
Weekly Chart – AMED
#7 %K above %D: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#8 Strong RSI: The RSI is above 50 and moving up. This is a bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the half the intended quantity of shares of AMED at the current price of $125.01. The rest of the shares can be purchased if the stock closes above the resistance level of $126.
TP: Our target prices are $135 and $145 in the next 4-6 months.
SL: To limit risk, place a stop loss at $122.20. Note that this stop loss is on a closing basis.
Our target potential upside is almost 7% to 16% in the next 4-6 months.
- Entry near $125.01: For a risk of $2.81, our target rewards are $9.99 and $19.99. This is a nearly 1:4 and 1:7 risk-reward trade.
- Entry near $126: For a risk of $3.80, our target rewards are $9.00 and $19.00. This is a 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 7x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the uptrend channel. 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=’Stansberry-801k’ /]