The purchase intelligence platform that helps make marketing more relevant and measurable, Cardlytics Inc. (NASDAQ: CDLX) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern: CDLX’s daily chart shows that the stock had recently formed an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. The base of the triangle generally acts as a good support level. The stock has currently broken out of the ascending triangle pattern, which is a possible bullish sign.
Daily Chart – CDLX
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This implies that there is a possible bullish bias for the stock.
[hana-code-insert name=’adsense-article’ /]#3 Symmetrical Triangle Pattern: The stock has also formed a Symmetrical Triangle pattern.
This is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs.
This is marked on the daily chart as purple dotted lines.
Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
#4 MACD above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
#5 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).
#6 New uptrend: The weekly chart shows that after a short-term downtrend, the stock has started a new uptrend as it has been forming higher highs and higher lows. This is a possible bullish indication.
Weekly Chart – CDLX
#7 Bullish Stochastic: As you can see from the weekly chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#8 Bullish MACD: The weekly chart also shows that the MACD line (blue color) is above the signal line (orange color). This is also a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price of CDLX is if it corrects to the support level of around $18 to $20.
Note: For those with higher risk appetite, you can purchase half the intended quantity of shares of CDLX at the current price of $21.25 and a stop loss of $17.10.
TP: Our target prices are $28 and $35 in the next 3-6 months.
SL: To limit risk, place a stop loss at $15.40 (for entry near $18) and $17.10 (for entry near $20). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 40% to 94% in the next 3-6 months.
- Entry at $18.00: For a risk of $2.60, the target rewards are $10.00 and $17.00. This is a nearly 1:4 and 1:7 risk-reward trade.
- Entry at $20.00: For a risk of $2.90, the target rewards are $8.00 and $15.00. This is a nearly 1:3 and 1:5 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 ascending 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 its sector.
Happy Trading!
Tara
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