The American multinational software company that provides server, application and desktop virtualization, networking, software as a service, and cloud computing technologies, Citrix Systems, Inc. (NASDAQ: CTXS) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Descending Triangle Pattern: The stock’s daily chart shows that it has been forming a descending triangle pattern. This is marked on the daily chart in purple color. If an upward breakout from a bearish pattern like descending Triangle pattern occurs, the stock may move higher.
Daily Chart – CTXS
#2 Multiple Bottoms: There are multiple bottoms formed for the stock, as shown in orange color in the daily chart. Multiple bottoms typically acts as a strong support level as well. This is a possible bullish sign.
#3 Unbroken Uptrend: The weekly chart shows that the trend of the stock is still up, as it has been forming higher highs and higher lows.
Weekly Chart – CTXS
#4 Pennant Pattern: As you can see from the weekly chart, the stock was in an uptrend after which it was in a consolidation phase with a narrowing range.
[hana-code-insert name=’adsense-article’ /]This is a classic pennant pattern, which is marked as pink lines in the weekly chart.Once a breakout happens from a continuation pattern like the pennant pattern, the stock may move higher.
#5 Bullish RSI: The RSI is currently near 50 after moving up from oversold levels.
This is a possible bullish sign.
#6 Above MA: In the weekly chart, the stock is currently above the 200-week SMA, indicating that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for CTXS is in two scenarios:
- If the stock closes above the resistance level of $112.
- If the stock corrects to the support level of $100.
Note: These levels are marked as green dotted lines in the daily chart for easier reference.
TP: Our target prices are $112 and $120 (when entering near $100) and $120 and $130 (when entering near $112) in the next 3-6 months.
SL: To limit risk, place a stop loss at $96.50 (when entering near $100) and $109.50 (when entering near $112). Note that the stop loss is on a closing basis.
Our target potential upside is almost 7% to 20% in the next 3-6 months.
- Entry near $100: For a risk of $3.50, our target rewards are $12.00 and $20.00. This is a 1:3 and 1:6 risk-reward trade.
- Entry near $112: For a risk of $2.50, our target rewards are $8.00 and $18.00. This is a 1:3 and 1:7 risk-reward trade.
In other words, this trade offers nearly 3x 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 base of the descending triangle pattern. 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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