The company that designs, manufactures, and installs laboratory, healthcare, and technical furniture products, Kewaunee Scientific Corporation (NASDAQ: KEQU) shows signs of an upcoming price surge according to its latest charts.
#1 Falling Wedge Breakout: The daily chart shows that the stock was trading within a falling wedge pattern 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 bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is moving up from below (-DI) and (+DI).
#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 Above support level: The weekly chart shows that the stock has currently bounced higher from a long-term support level. This support area is marked as a pink color dotted line. This seems like a good sign for a near-term upmove.
#7 Bullish Stoch: The %K line (blue color) is above the %D (orange color) of the stochastic in the weekly chart. This is a possible bullish sign.
#8 Bullish MACD: The MACD line is above the signal line in the weekly chart. This is a possible bullish sign
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for KEQU is near the breakout level of the falling wedge pattern. This translates to a price of around $8.50. But for those with a higher risk appetite, you can purchase half the intended quantity of shares of KEQU if it trades above the price of around $11.70.
TP: Our target prices are $15 and $18 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $10.00 (for entry near $11.70) and $6.75 (for entry near $8.50). Note that this stop loss is on a closing basis.
Our target potential upside is almost 28% to 112% in the next 4-6 months.
- Entry near $8.50: For a risk of $1.75, our first target reward is $6.50 and the second target reward is $9.50. This is a nearly 1:4 and 1:5 risk-reward trade.
- Entry near $11.70: For a risk of $1.70, our first target reward is $3.30 and the second target reward is $6.30. This is a nearly 1:2 and 1:4 risk-reward trade.
Overall, this trade offers nearly 2x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge pattern. 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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