The international protective clothing provider whose key products include disposable protective clothing, chemical protective suits, fire fighting, and heat-protective apparel, Lakeland Industries, Inc. (NASDAQ: LAKE) seems poised for a price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As seen in the daily chart, a symmetrical triangle pattern was formed during the past few weeks. This pattern is shown in pink color lines and represents a period of consolidation before the price breaks out.
A symmetrical triangle pattern is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line of the pattern occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating bullishness.
Daily Chart – LAKE
#2 Above MAs: The stock price is currently above both 50-day as well as 200-day SMA. This is a possible bullish sign.
#4 Double Bottom Pattern: The daily chart shows that the stock is currently forming a double bottom pattern.
This is marked in orange color.
A double bottom pattern is a bullish reversal pattern and a breakout from it would indicate that the stock could possibly move upwards.
#5 Strong Support, consolidation: The weekly chart shows that the stock has currently broken out of a long-term resistance level. This is marked as a purple color line. This area now acts as a great support area. The stock is currently consolidating after the breakout and seems to be getting ready for an upmove. This consolidation area is marked as a green rectangle. All these are possible bullish signs.
Weekly Chart – LAKE
#6 MACD above Signal Line: In the weekly chart, the MACD (light blue color) is currently above the MACD signal line (orange color), indicating bullishness.
#7 Bullish ADX and DI: The ADX indicator shows bullishness in the weekly chart as well, as the (+DI) line is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has risen above both (+DI) and (-DI).
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy price for LAKE is above $18.
TP: Our target prices are $22 and $26 in the next 4-6 months.
SL: To limit risk, place a stop loss at $15.30. Note that this stop loss is on a closing basis.
Our target potential upside is 22% to 44% in the next 4-6 months.
For a risk of $2.70, our target rewards are $4.00 and $8.00. 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 with high volume from the symmetrical triangle pattern. 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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