The Braintree, Massachusetts-based global provider of blood and plasma supplies and services, Haemonetics Corporation (NYSE: HAE) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Downtrend Channel Pattern Breakout: As you can see from the daily chart of HAE, the stock has been forming a downtrend channel during the past several months. It had typically taken support at the bottom of the channel before bouncing back. The stock has currently broken out of the downtrend channel, indicating possible bullishness.
Daily Chart – HAE
#2 Double Bottom Pattern Breakout: Within the downtrend channel, the stock had formed a double bottom pattern. This is marked in the daily chart in pink color. A double bottom pattern is a bullish reversal pattern and a breakout from it indicates that the stock could possibly move upwards. Currently, the stock has broken out of the double bottom pattern, indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Price above MA: The stock is currently above the 50-day SMA, indicating that the bulls have currently gained control.
#4 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.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#6 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
#7 Flag Pattern: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). Currently, the stock has broken out of the flag pattern which is a possible bullish sign.
Weekly Chart – HAE
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#9 Bullish RSI: In the weekly chart, RSI is moving up from oversold levels and is currently above 50. This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of HAE at the current price of $93.42.
TP: Our target prices are $100 and $110 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $89.10. Note that the stop loss is on a closing basis.
Our target potential upside is 7% to 18% in the next 3-6 months. For a risk of $4.32, our first target reward is $6.58 and second target reward is $16.58. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the double bottom pattern with 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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