The American company engaging in the design, manufacture, and servicing of capital equipment for the semiconductor manufacturing industry worldwide, Axcelis Technologies Inc. (NASDAQ: ACLS) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart of ACLS, the stock has been forming a falling wedge pattern for the past several weeks. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out of the falling wedge pattern, indicating possible bullishness.
Daily Chart – ACLS
#2 Strong RSI: The reading of RSI is currently above 50, indicating possible bullishness.
#3 Double Bottom Pattern: Within the falling wedge pattern, the stock had formed a double bottom pattern.
This is marked in the daily chart in purple 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 bullishness.
#4 Hammer: The latest candle in daily chart is a hammer.
This hammer has taken support at the breakout level of the double bottom pattern. This indicates a possible reversal from the current downtrend.
#5 MACD above Signal Line: In the daily chart, the MACD (light blue color) has currently crossed above the MACD signal line (orange color). It is also near oversold levels. This indicates a possible bullish setup.
#6 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. ACLS has taken support at the 23.6% Fibonacci support level of the upmove, as seen in the weekly chart. This seems like a good point to bounce back.
Weekly Chart – ACLS
#7 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#8 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, purchase shares of ACLS at the current price of $19.29.
TP: Our target prices are $25 and $30 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $17.90. Note that the stop loss is on a closing basis.
Our target potential upside is 30% to 56% in the next 3-6 months.
For a risk of $1.39, our first target reward is $5.71 and second target reward is $10.71. In other words, this trade offers 4x to 8x 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 sector.
Happy Trading!
Tara
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