A major American manufacturer of diagnostic healthcare products that are sold worldwide, Quidel Corporation (NASDAQ: QDEL) seems to be getting ready for a price bump as per the latest charts.
Bullish Move – Chart Indications
#1 Breakout from Consolidation Area: The daily chart shows that the stock has been trading within a range since the past several weeks. This indicates consolidation. The consolidation area is marked as an orange color rectangle in the daily chart. A breakout from this consolidation area generally indicates bullishness.
Daily Chart – QDEL
#2 Above MAs: The stock is currently trading above its 50-day SMA as well as 200-day SMA. This indicates overall bullishness for the stock.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#5 Bullish ADX: The +DI line is currently above the -DI line. The ADX line is also currently moving up from below the –DI and +DI lines. This indicates possible bullishness.
#6 Ascending triangle pattern breakout: The weekly chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked in the chart in pink lines. A breakout usually indicates the start of a bullish move.
Weekly Chart – QDEL
#7 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the weekly chart. This usually indicates bullishness.
#8 Bullish MACD: The MACD line is above the signal line in the weekly chart too, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for QDEL is at the breakout level of the consolidation area, at around $83. However, you can purchase half the intended quantity of shares of QDEL if it trades above yesterdays close. This translates to a price of around $90.
TP: Our target prices are $100 and $110 in the next 3-5 months.
SL: To limit risk, place a stop loss near $76 (for entry near $83) and $83.90 (for entry near $90). Note that the stop loss is on a closing basis.
Our target potential upside is 11% to 33% in the next 3-6 months.
- Entry at $83: For a risk of $7.00, our first target reward is $17.00 and the second target reward is $27.00. This is a nearly 1:2 and 1:4 risk-reward trade.
- Entry at $90: For a risk of $6.10, our first target reward is $10.00 and the second target reward is $20. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the consolidation are 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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