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small-cap

Technical Analysis Report - Is It Prudent to Book Profit on This Financial Technology Stock - GSKY

Sep 16, 2021 | Team Kalkine
Technical Analysis Report - Is It Prudent to Book Profit on This Financial Technology Stock - GSKY

GreenSky Inc 

GreenSky Inc (NASDAQ: GSKY) is a financial technology company. It provides financing solutions and technology payments to patients of healthcare providers.

As per our previous recommendation on GSKY on August 27, 2021, we recommended a ‘Buy’ rating on the stock at USD 7.55 level for 2-4 weeks duration from the technical analysis standpoint. However, considering the recent price action, technical indicators, resistance level analysis, and double-digit returns; we are of the view that it is prudent to book profits at the current levels. Hence, we give a 'Sell' rating on the stock at the close price of USD 11.90 (as on September 15, 2021). The summary of our 'Sell' rating and price movement since the previous recommendation on GSKY is provided as below:

Price action and technical indicator analysis (on the Daily chart):

GSKY’s prices moved up by ~58.28 percent from the recommended entry price and made a high of USD 11.95 on September 15, 2021. Prices witnessed a sharp upside movement in the recent past and now trading around the major resistance level of USD 13.00. A downside movement from the current levels may start a correction phase in the stock that could drive the prices to the lower levels.

On the weekly chart, RSI (14-period) is trading in the extremely overbought zone at ~85.49 levels, further supporting a downside correction. However, prices are still sustaining above 21-period and 50-period SMA, which acts as the support levels for the stock.

Conclusion:

Based on the above-mentioned price action, RSI (14-period), and resistance level analysis, we recommend a ‘Sell’ rating on GSKY and suggest investors to book profit at the at the close price of USD 11.90 (as on September 15, 2021). 

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is September 15, 2021. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.