The energy technology company headquartered in Fremont, California that designs and manufactures software-driven home energy solutions that span solar generation, home energy storage, and web-based monitoring and control, Enphase Energy Inc. (NASDAQ: ENPH) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Near Support Area: As you can see from the daily chart, the stock is currently near a gap support area. This is marked as a pink dotted line. This seems like a good area for the stock to move higher.
Daily Chart – ENPH
#2 Above MA: In the daily chart, the stock is currently trading above its 200-day SMA. This implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 Oversold RSI: In the weekly chart, the RSI is currently near oversold levels.
This is a possible sign for an upcoming bullish reversal.
#4 Bullish Stochastic: The stochastic in the daily chart is currently near oversold levels and moving higher.
The %K line has also crossed above the %D line. All these indicate possible bullishness.
#5 Support At Fibonacci Level: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again.
ENPH has currently taken support at the 61.8% Fibonacci support level of the upmove, as seen in the weekly chart. This seems like a good point to bounce up higher.
Weekly Chart – ENPH
#6 Price above MAs: In the weekly chart, the stock is currently trading above its short-term moving average of 50-week SMA as well as the longer-term moving average of 200-week SMA. This implies that the bulls are currently in control.
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
#8 RSI above 50: The weekly chart shows that the RSI had moved down from overbought levels and is currently staying above 50. This indicates that the strength of the bullishness is still intact.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ENPH is if the stock crosses above the near-by resistance level of around $26.40. This is marked as a green dotted line in the daily chart.
TP: Our target prices are $35 and $40 in the next 4-6 months.
SL: To limit risk, place stop-loss at $23.40. Note that the stop loss is on a closing basis.
Our target potential upside is 33% to 52% in the next 4-6 months.
For a risk of $3.00, our target rewards are $8.60 and $13.60. This is a 1:3 and 1:5 risk-reward trade.
In other words, this trade offers nearly 3x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the gap support level 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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