The American restaurant chain, headquartered in Huntington Beach, California that operates under the names BJ’s Restaurant & Brewery, BJ’s Restaurant & Brewhouse, BJ’s Grill, and BJ’s Pizza & Grill, BJ’s Restaurants, Inc. (NASDAQ: BJRI) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart of BJRI shows that the stock has been trading within a downtrend channel during the past several weeks. This channel is marked in purple color lines. Once a stock breaks out of the downtrend channel, it has the potential to move further up. Currently, the stock has broken out of the downtrend channel, which is a possible bullish sign.
Daily Chart – BJRI
#2 Trading Above MA: The stock is currently trading above its 50-day moving average, indicating a bullish bias for the stock.
[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 line of the stochastic is above the %D line.
This indicates a possible bullish bias.
#5 Bullish ADX and DI: The ADX line is starting to move up from below –DI and +DI lines in the daily chart.
The +DI line is also currently above –DI line. This indicates possible bullishness.
#6 Broken Downtrend: The weekly chart shows that the stock has currently broken out of a short-term downtrend (marked as a pink color line). This is a possible bullish sign.
Weekly Chart – BJRI
#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.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of BJRI in two scenarios
- If the stock closes above $43.70. (marked as a green dotted line in the daily chart)
- If the stock corrects to the support level of around $40. (marked as a pink dotted line in the daily chart)
TP: Our target prices are $52 and $60 in the next 3 to 6 months.
SL: To limit risk, place a stop loss below $36.80 (for entry near $40) and $38.50 (for entry near $43.70). Note that this stop loss is on a closing basis.
Our target potential upside is almost 19% to 50% in the next 3-6 months.
- Entry near $40.00: For a risk of $3.20, our first target reward is $12.00 and the second target reward is $20.00. This is a 1:4 and 1:7 risk-reward trade.
- Entry near $43.70: For a risk of $5.20, our first target reward is $8.30 and the second target reward is $16.30. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x 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 channel breakout level. 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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