The American chain of discount retail stores founded in 1982, Ollie’s Bargain Outlet Holdings Inc. (NASDAQ: OLLI) shows signs of an upcoming price surge according to its latest charts.
#1 Channel Breakout: The daily chart of OLLI shows that the stock was trading within a channel during the past few months. This pattern is marked in the daily chart in pink color. The stock has currently broken out from it. Once the stock breaks out from a channel, it has the potential to move further up.
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 %K above %D of Stoch: 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 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.
#6 Downtrend Broken: The daily chart shows that the stock has currently broken out of a short-term downtrend. This downtrend line is marked in purple color. This is a possible bullish sign.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. OLLI has taken support at the 50% Fibonacci support level of the upmove, as seen in the weekly chart. The price is also above the 200-week SMA. All these are a possible bullish signs.
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 Bullish MACD: The weekly chart also shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of OLLI if it trades above yesterday’s close. This translates to a price above $69.35.
TP: Our target prices are $75 and $80 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $66.70. Note that this stop loss is on a closing basis.
Our target potential upside is almost 8% to 15% in the next 4-6 months.
For a risk of $2.65, our first target reward is $5.65 and the second target reward is $10.65. This is a nearly 1:2 and 1:4 risk-reward trade.
Overall, 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 with high volume from the trend channel. 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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