Terrestrial Energy Inc. (NASDAQ: IMSR) seems poised for a price surge based on its latest charts. The company is an advanced nuclear technology company primarily focused on developing the Integral Molten Salt Reactor (IMSR), a Generation IV small modular reactor (SMR) designed to provide emission-free, high-temperature industrial heat and electricity. IMSR produces carbon free nuclear energy in North Carolina and internationally.

The stock was also a part of our recent watchlist for breakout stocks.

Bullish Indications

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

IMSR – Daily Chart

#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are still in 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 ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below the –DI and +DI lines. This indicates possible bullishness.

#5 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.

IMSR – Weekly Chart

#6 Positive OBV: The weekly chart shows that the OBV indicator is currently rising. OBV rises when volume in up weeks outpaces volume in down weeks. A rising OBV typically reflects positive volume pressure that can lead to higher prices.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, you can purchase shares of IMSR above the price of around $11.65.

TP: Our target prices are $16.00 and $19.50 in the next 3-6 months.

SL: To limit risk, place a stop-loss at $9.10. Note that the stop-loss is on a closing basis.

Our target potential upside is 37% to 67% in the next 3 to 6 months.

For a risk of $2.55, our target rewards are $4.35 and $7.85. 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 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