Vermilion Energy Inc. (NYSE: VET) seems poised for a price surge based on its latest charts. The company engages in the acquisition, exploration, development, and production of petroleum and natural gas. VET has properties in Canada, the United States, France, the Netherlands, Germany, Ireland, Croatia, Slovakia, and Australia.

The company recently entered into an arrangement agreement to acquire Westbrick Energy Ltd., a privately held oil and gas company operating in the Deep Basin, for a total consideration of $1.075 billion.

Bullish Indications

#1 Falling Wedge Pattern: As you can see from the daily chart, the stock had been forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock currently looks poised for a breakout of the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.

VET – Daily Chart

#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA, indicating that the bulls are gaining control. This is a positive indication.

#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.

#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.

#5 Positive OBV: The daily chart shows that the OBV indicator is currently rising. OBV rises when volume on up days outpaces volume on down days. A rising OBV typically reflects positive volume pressure that can lead to higher prices.

#6 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher.

VET – Weekly Chart

#7 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.

#8 Bullish RSI: In the weekly chart, the RSI is currently nearing 50 and moving higher. This is a possible bullish sign.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, you can purchase shares of VET above the price of around $10.00.

TP: Our target prices are $12.00 and $13.50 in the next 3-6 months.

SL: To limit risk, place stop-loss at $8.90. Note that the stop-loss is on a closing basis.

Our target potential upside is 20% to 35% in the next 3 to 6 months.

For a risk of $1.10, our target rewards are $2.00 and $3.50. This is a nearly 1:2 and 1:3 risk-reward trade.

In other words, this trade offers nearly 2x to 3x 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 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.

Happy Trading!

Tara

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Source: Trades of the Day