The oilfield services company providing hydraulic fracturing and other complementary services, Propetro Holding Corp (NYSE: PUMP) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, the stock has been trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in blue color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
Daily Chart – PUMP
#2 Above MA: In the daily chart of PUMP, the stock is currently trading above both 50-day as well as 200-day SMA. This implies that the bulls are currently in control.
#4 Strong Stochastic with %K above %D: The %K line is above the %D line in the stochastic. This is a bullish sign.
#5 Bullish CCI: The CCI is currently above 100 and moving up from oversold levels. This is a possible bullish sign.
#6 Flag Pattern: The stock was in a strong uptrend, after which it started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. This pattern is marked in purple color on the weekly chart. Once the stock breaks out of the flag pattern, it has the potential to move further up.
Weekly Chart – PUMP
#7 Strong RSI: The RSI is above 50 and moving up. This is a bullish sign.
#8 Bullish Stochastic: The weekly chart shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, buy half the intended quantity of PUMP at the current price of $17.63 and the rest if the stock breaks out of the flag pattern at a close of above $18.50.
TP: Our target prices are $25 and $35 in the next 4-6 months.
SL: To limit risk, place stop-loss at $15.80. Note that the stop loss is on a closing basis.
Our target potential upside is 35% to 99% in the next 4-6 months.
- Entry at $17.63: For a risk of $1.83, our target rewards are $7.37 and $17.37. This is an almost 1:4 and 1:9 risk-reward trade.
- Entry at $18.50: For a risk of $2.70, our target rewards are $6.50 and $16.50. This is an almost 1:2 and 1:6 risk-reward trade.
In other words, this trade offers nearly 2x to 9x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel and 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