The global provider of the cloud and software platforms, systems and services to deliver unified access networks, and smart premises systems, Calix Inc. (NYSE: CALX) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Above Resistance Area: The daily chart shows that the stock has currently broken out of a long-term resistance area, which is marked as an orange color dotted line. This could now act as a good support level for the stock to move higher.
Daily Chart – CALX
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) and ADX lines are greater than (-DI), and the ADX line has started moved up from below (-DI) and (+DI).
#5 Cup and Handle Pattern Breakout: The weekly chart shows that the stock has broken out of a cup and handle pattern. This is marked in the chart in pink color. A cup and handle pattern is a well-known consolidation and breakout pattern. A breakout from this pattern indicates that the stock may move higher. Typically, stocks retrace to the breakout level again before continuing the upmove.
Weekly Chart – CALX
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#7 MACD above Signal Line: In the weekly chart as well, the MACD line is currently above the MACD signal line which is a bullish signal. This is a possible bullish sign.
#8 Price above MAs: The stock is currently trading above its short-term moving average of 50-week SMA as well as the longer-term moving average of 200-week SMA, indicating 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 CALX if it trades above yesterday’s close. This translates to a price of around $12.00
TP: Our target prices are $15 and $18 in the next 3-6 months.
SL: To limit risk, place a stop loss near $10.00. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 25% to 50% in the next 3-6 months.
For a risk of $2.00, the target rewards are $3.00 and $6.00. 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 breakout level of the resistance area. 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 its sector.
Happy Trading!
— Tara
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