The company that manufactures and sells engineered equipment for the energy and industrial gas industries worldwide, Chart Industries, Inc. (NASDAQ: GTLS) seems to be gearing up for a surge as per its latest charts.
#1 Ascending triangle pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The breakout level of the ascending triangle pattern generally acts as a good support level.
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#4 MACD above Signal Line: In the daily chart, the MACD line is above the MACD signal line which is a bullish signal.
#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 IH&S Pattern Breakout: From the weekly chart, we can see that the stock has recently broken out of an Inverted Head and Shoulders (IH&S) pattern. This pattern is marked in the weekly chart in orange color. An IH&S pattern is a bullish pattern. A breakout from an IH&S pattern is usually the sign of an upcoming bullish move. The weekly chart also shows that the stock is currently trading above its 50-week as well as 200-week SMA. All these are possible bullish signs.
#7 MACD above Signal Line: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal. The stock is also trading above its 50-week SMA, indicating that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the recommended buy level for GTLS is above $84.50.
TP: Our target prices are $90 and $100 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $81.40. Note that this stop loss is on a closing basis.
Our target potential upside is 7% to 18% in the next 4-6 months.
For a risk of $3.10, the target rewards are $5.50 and $15.50. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending triangle and IH&S 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 its sector.
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