The master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia, CNX Midstream Partners LP (NYSE: CNXM) seem to be poised for a price surge as per its latest charts.
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock has been trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in pink color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
#2 Channel Breakout: The stock has been trading within a downtrend channel for the past several months. This channel is marked on the chart in blue color dotted lines. The stock has currently broken out of the channel. This seems like a possible bullish sign.
This is a possible bullish setup.
#4 Above MA: In the daily chart, the stock is currently trading above the 50-day SMA.
This implies that the bulls are currently in control.
#5 %K above %D: The %K line is above the %D line in the stochastic.
This is a possible bullish sign.
#6 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line. This indicates possible bullishness.
#7 Downtrend Broken in Weekly Chart: As evident from the weekly chart, the stock was in a short-term downtrend. Currently, it has broken out from the downtrend, which is a possible bullish sign.
#8 Strong RSI: The RSI is above 50 and moving up. This is a bullish sign.
#9 Bullish Stochastic: The weekly chart also shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CNXM is above a close of around $16.
TP: Our target prices are $20 and $25 in the next 4-6 months.
SL: To limit risk, place stop-loss at $13.90. Note that the stop loss is on a closing basis.
Our target potential upside is 25% to 56% in the next 4-6 months.
For a risk of $2.10, our target rewards are $4.00 and $9.00. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel and the falling wedge pattern 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.
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