This Trade Targets a 41% to 122% Return in the Next 4-8 Months

The clinical stage biotechnology company engages in developing antibody product candidates focused on unmet medical needs in inflammation, AnaptysBio Inc. (NASDAQ: ANAB) seems to be ready for an upmove in the near term as per its latest charts.

Bullish Indications

#1 Falling Wedge Pattern: The daily chart shows that the stock has been forming a falling wedge pattern during the past few weeks. This is marked in purple color in the daily chart. The stock is currently near the bottom of this falling wedge pattern. If the stock breaks out of the top of the falling wedge pattern, it can move higher in the near-term.

Daily Chart – ANAB

#2 %K above %D Line: The daily chart of ANAB shows that the %K line (light blue color) has crossed above the %D line (orange color) in stochastic. When this happens, it usually indicates a bullish setup.

[hana-code-insert name=’adsense-article’ /] #3 Oversold RSI:  The daily chart shows that the RSI is currently oversold and is about to move upwards. This is a bullish sign.

#4 Doji: The latest candlestick is a Doji, indicating indecision among sellers and buyers. The price may start to move higher in the near-term.

#5 Oversold %R: William’s %R value is currently moving up from below -80. This indicates that a possible reversal may be imminent.

#6 Fibonacci Level Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. ANAB had taken support at the 38.2% Fibonacci support level of the upmove, as seen in the weekly chart. This was also a good demand area. This seems like a good point to bounce back from.

Weekly Chart – ANAB

#7 Oversold RSI: The RSI in the weekly chart is currently oversold and moving up, indicating possible bullishness.

#8 CCI moving up: The CCI is starting to move up from below -100. This is also a bullish sign.

The stock had been on an uptrend after which it has been steadily correcting with low volume. This implies that the stock may soon move up.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, the ideal buy level is if the stock corrects to around $63. However, for those who prefer a speedier entry, you can purchase half the shares of ANAB at the current price of $70.49.

TP: Our target prices are $100 and $140 in the next 4-8 months.

SL: To limit risk, place a stop loss at $59.50. Note that this stop loss is on a closing basis.

Our target potential upside is 41% to 122% in the next 4-8 months.

  • Entry at $63: For a risk of $3.50, our target rewards are $37 and $77. This is a 1:11 and 1:22 risk-reward trade.
  • Entry at $70.49: For a risk of $10.99, our target rewards are $29.51 and $69.51. This is a 1:3 and 1:6 risk-reward trade.

In other words, this trade offers nearly 3x to 22x more potential upside than downside.

Risks to Consider
The stock may reverse its overall trend if it breaks down from the long-term support level 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 its sector.

Happy Trading!


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