The American pharmaceutical company focused on the development of a first-in-class, orally available, small molecule designed to significantly lower elevated levels of LDL-C – with the reduced potential for muscle-related side effects associated with statin use, Esperion Therapeutics Inc. (NASDAQ: ESPR) seem to be poised for a price surge after a slight correction as per its latest charts.
Bullish Indications
#1 Multiple Bottom Pattern: From the daily chart of ESPR, we can see that the stock had formed multiple bottoms. This level is marked in the daily chart in orange color. Bouncing upwards after forming multiple bottoms is a strong bullish indication and foretells a possible upmove in the near term.
Daily Chart – ESPR
#2 Stochastic –Price Bullish Divergence: There is a bullish divergence between Stochastic and price. While the price formed a lower low, Stochastic formed to a higher low. This is marked as blue dotted lines in the daily chart. The %K line of the stochastic is also above the %D line. These are all bullish signs.
[hana-code-insert name=’adsense-article’ /]#3 Trading Above MAs: The stock is currently trading above its 50-day and 200-day moving average indicating a bullish bias for the stock.#4 Strong RSI: RSI is currently above 50 and moving up, indicating strength.
#5 MACD above Signal Line: In the daily chart, the MACD (light blue color) has currently crossed above the MACD signal line (orange color).
This indicates a possible bullish setup.
#6 Downtrend Broken: The daily chart shows that the stock has currently broken out from a short-term downtrend.
The downtrend line is marked as a purple color line in the daily chart. This is a bullish sign.
#7 Cup and Handle pattern: The weekly chart shows that the stock is currently forming a cup and handle pattern. This is marked in the chart in orange color. A cup and handle pattern is a consolidation and breakout pattern and a breakout from it indicates that the stock may move higher in the short term.
Weekly Chart – ESPR
#8 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color). It is also near oversold levels. This indicates bullishness.
#9 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the weekly chart, indicating bullishness.
#10 Bullish RSI: RSI is above 50 and moving up, indicating the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ESPR at the price between $50 and $55. This is marked as a pink rectangle on the daily chart.
TP: Our target prices are $70 and $85 in the next 4-6 months.
SL: To limit risk, place stop-loss at $47.50. Note that stop loss is on a closing basis.
Our target potential upside is 27% to 70% in the next 4-6 months.
- Entry at $50: For a risk of $2.50, our target rewards are $20.00 and $35.00. This is a nearly 1:8 and 1:14 risk-reward trade.
- Entry at $55: For a risk of $7.50, our target rewards are $15.00 and $30.00. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 14x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the support level of multiple bottoms. 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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