The California-based cloud content management and file sharing service for businesses, Box Inc. (NYSE: BOX) seem to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock was forming a symmetrical triangle pattern. This pattern is shown as pink color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, which is a possible bullish sign.
Daily Chart – BOX
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the long-term moving average of 200-day SMA. This is a possible bullish sign.
#4 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart. This typically indicates a bullish setup.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart. It is also moving up from oversold levels. All these indicate possible bullishness.
#6 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has moved up from below (-DI).
Weekly Chart – BOX
#7 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. BOX had taken support at the 23.6% Fibonacci support level before moving higher, as seen in the weekly chart. So, this seems like a strong support area for the stock.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BOX is above the resistance level of $19.
TP: Our target prices are $25 and $30 in the next 4-6 months.
SL: To limit risk, place stop-loss at $15.20. Note that the stop-loss is on a closing basis.
Our target potential upside is 32% to 58% in the next 4 to 6 months.
For a risk of $3.80, our target rewards are $6.00 and $11.00. 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 symmetrical triangle breakout level 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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