The company engaged in the design, development, and marketing of security solutions and previously known as VASCO Data Security International, Inc., Onespan Inc. (NASDAQ: OSPN) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Bullish Engulfing: The daily chart shows that the latest candlestick pattern of OSPN is a bullish engulfing pattern. This is a bullish candlestick pattern that indicates that the price may move higher in the short term.
Daily Chart – OSPN
#2 RSI Oversold: The daily chart of OSPN shows that the RSI is currently moving up after reaching oversold levels. This points to a possible reversal from the prevailing downtrend.
#3 Oversold Stochastics: The stochastics oscillator shows that it is currently near oversold levels and moving up.
The %K (blue) line is also about to cross above the %D (orange) line.
This indicates a possible reversal from the current short-term downtrend.
#4 Good Support Levels: Stocks usually retrace to key Fibonacci levels before moving back up.
OSPN has currently taken support near the 38.2% level of its move.
This seems like a good level to bounce upwards. There is also a gap support nearby (marked as pink dotted lines). This also acts as a good support level.
#5 CCI moving up: The CCI is moving up from below -400, indicating a possible reversal of the current downtrend.
#6 Consolidation and Breakout in Weekly Chart: As evident from the weekly chart, the stock was consolidating within a range for the past few weeks. This is marked as a green rectangle in the weekly chart. The stock broke out of this range with high volume on the week ending May 7, 2018. The stock then rallied after which it started correcting. It is currently near the breakout level, which is a good area for a bounceback.
Weekly Chart – OSPN
#7 Above MA: The stock is currently above the 50-week SMA. This indicates that the bulls are still in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of OSPN at the current price of $17.25.
TP: Our target prices are $20 and $25 in the next 3-5 months.
SL: To limit risk, place stop-loss at $15.40. Note that stop loss is on a closing basis.
Our target potential upside is 16% to 45% in the next 3-5 months. For a risk of $1.85, our target rewards are $2.75 and $7.75. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, 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 from the gap support 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