Analyzing the market on the finish of the buying and selling day can provide a calmer, much less risky surroundings, permitting you to suppose extra clearly when scanning for market alternatives. The StockCharts Technical Rank (SCTR) Report is normally a very good place to begin, because it lists top-performing shares in several phases of their respective traits.

As Wednesday’s market session approached its shut, I checked the SCTR Report on my Dashboard. Whereas some shares have constantly cycled by means of the highest 10, others, just like the fintech firm SoFi Applied sciences, Inc. (SOFI), are relative newcomers.

FIGURE 1. SCTR REPORT FOR WEDNESDAY DECEMBER 11, 2024. SOFI is sixth from the highest with a SCTR rating of 99.3.Picture supply: StockCharts.com. For academic functions.

SOFI is a fintech firm based in 2011. Its attraction lies in its speedy development (and development potential), user-friendly digital platform, and give attention to youthful, tech-savvy prospects. Since going public in 2021, the corporate has positioned itself as a disruptor in conventional banking. It is had fairly a risky run up and down, however now appears to be regaining favor amongst buyers.

Stalling at a Congestion Vary

Taking a look at SOFI’s weekly chart, you’ll be able to see the place the development has stalled. This underscores the significance of viewing long-term value motion for key ranges, notably the place heavy shopping for and promoting has occurred. Value tends to react strongly to those historic ranges, resulting in the notion that the market has a reminiscence.

FIGURE 2. WEEKLY CHART OF SOFI. Bullish buyers take revenue at a key congestion stage courting again to 2021.Chart supply: StockCharts.com. For academic functions.

You may see that the value stalled at a variety the place concentrated exercise occurred in 2021 (between $15 and $17). Quick-forward to 2024, and patrons are taking income at this stage (see blue rectangle), maybe anticipating that this historic congestion vary may function a resistance zone.

If value breaks above this stage, the swing highs on the $25 vary and $28, SOFI’s all-time excessive, can function longer-term revenue targets. However what is the probability of value breaking above the present swing excessive level of $16.60 within the close to time period? Let’s take a look at the every day chart.

FIGURE 3. DAILY CHART OF SOFI. Can momentum gasoline an uptrend following the bounce?Chart supply: StockCharts.com. For academic functions.

Be aware the SCTR rating because it moved above the 80 line, which I think about a bullish threshold. Particularly, notice the way it coincides with SOFI breaking above a ‘native’ excessive following an extended basing interval (see dotted magenta line).

Subsequent, observe how value, following a robust advance, had pulled again and is presently bouncing off the center Bollinger Band.

Is there sufficient momentum to assist the bounce and a continuation of the development?  Should you have a look at earlier bounces, highlighted by the magenta rectangles, you’ll be able to see how most bullish reversals coincided with a Stochastic Oscillator studying beneath (or close to) the 20 thresholds, signaling an ‘oversold’ situation. The present bounce is barely above the 50-line, and this tells you that the present momentum could also be weaker in comparison with earlier reversals. Whereas this does not assure SOFI goes to dip within the close to time period, it suggests try to be cautious and search for further affirmation, comparable to stronger quantity or different indicators signaling bullish situations, earlier than assuming the development will persist.

If, for any purpose, you already went lengthy the inventory close to the present value, you’ll be able to place a cease loss beneath the closest consecutive swing lows at $14.80 and $13.00 to handle potential losses should you’re presently lengthy.

If you have not entered an extended place but and want to purchase, it is a normal precept to go lengthy upon the breakout utilizing probably the most present swing excessive as your entry level. Nevertheless, that setup can change if SOFI pulls again additional and kinds a decrease swing excessive level.

The Recreation Plan

Here is your actionable sport plan for SOFI:

1. Add SOFI to your ChartList. This can make it easier to preserve an in depth eye on SOFI’s value motion. Be aware the important thing ranges of curiosity, together with at $16.60 (present swing excessive), at $14.80 and $13.00 (cease loss ranges), and at $25 and $28 (potential long-term revenue targets).
2. Plan your entry technique. Should you’re not already within the commerce, look forward to a breakout above the $16.60 swing excessive for a possible entry level. Alternatively, if the inventory pulls again additional, monitor for a decrease swing excessive to regulate your technique.
3. Monitor momentum and quantity. Use indicators just like the Stochastic Oscillator or every other of your selecting to substantiate the energy of the present value motion. If value pulls again additional, search for an oversold Stochastic studying (an excellent situation) and/or a decisive quantity spike to validate bullish momentum.
4. Set your stops and targets. Tighten your danger administration by setting stop-loss orders at $14.80 and $13.00. For potential upside, purpose for $25 and $28 as long-term targets if the breakout sustains.

On the Shut

The SCTR Report highlighted SOFI as a compelling alternative, however its present value motion requires cautious monitoring. By including SOFI to your ChartList and following the outlined setup, you’ll be able to develop your personal method to SOFI that capitalizes on its potential upside whereas defending your self in opposition to the draw back dangers.

Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your personal private and monetary scenario, or with out consulting a monetary skilled.