The Massachusetts-based company that provides software as a service and cloud-based remote connectivity services for collaboration, IT management and customer engagement, LogMeIn Inc. (NASDAQ: LOGM) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern: As you can see from the daily chart, the stock has been forming a falling wedge pattern for the past few months. This is marked as purple color lines. The stock is currently near the upper rail of the falling wedge pattern after taking support at the bottom of the wedge. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
Daily Chart – LOGM
#2 Price above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are presently in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#4 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart.
This is a possible bullish indication.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. LOGM had taken support at the 23.60% Fibonacci support level as seen in the weekly chart before moving higher. So, this seems like a strong support area for the stock.
Weekly Chart – LOGM
#7 RSI -Price Bullish Divergence: There is a bullish divergence between RSI and price in the weekly chart. While the price formed a lower low, the RSI formed to a higher low. This is marked as blue dotted lines in the chart. A bullish divergence is usually the sign of a possible upmove in the near-term. The RSI is also moving up after reaching oversold levels. This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for LOGM is if the stock closes above $80. But for those with a higher risk appetite, you can purchase half the intended quantity of shares of LOGM at the current price of $72.25.
TP: Our target prices are $90 and $100 in the next 4-6 months.
SL: To limit risk, place a stop loss below $65.10 (for entry near $72.25) and $74.50 (for entry near $80). Note that the stop loss is on a closing basis.
Our target potential upside is 13% to 38% in the next 4-6 months.
- Entry near $72.25: For a risk of $7.05, our first target reward is $17.75 and the second target reward is $27.75. This is a nearly 1:3 and 1:4 risk-reward trade.
- Entry near $80: For a risk of $5.50, our first target reward is $10.00 and the second target reward is $20.00. 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 falling wedge 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 energy sector.
Happy Trading!
Tara
[hana-code-insert name=’oxford 2′ /]