The American pharmaceutical corporation headquartered in New York City, with its research headquarters in Groton, Connecticut, Pfizer Inc. (NYSE: PFE) shows signs of an upcoming price surge according to its latest charts.
#1 Falling Wedge Breakout: The daily chart of PFE shows that the stock was trading within a falling wedge pattern during the past few months. This pattern is marked in the daily chart in purple color. The stock has currently broken out from it. Once the stock moves breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
#2 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#4 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is above the MACD signal line (orange color).
This is a possible bullish setup.
#5 Unbroken Uptrend: The weekly chart shows that the stock is still on an uptrend as it has been forming higher highs and higher lows.
The stock is also trading above its 50-week and 200-week SMA, indicating a possible bullish bias.
#6 Flag Breakout: As you can see from the weekly chart, the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). However, a retest of the flag pattern’s breakout level usually happens before resuming the trend.
#7 Bullish RSI: The RSI is above 50 and moving up in the weekly chart. This indicates possible bullishness.
#8 Bullish Stoch: The %K line (blue color) is above the %D (orange color) of the stochastic in the weekly chart. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of PFE at the current price of $43.08. The rest can be purchased if the stock corrects to the breakout level of the falling wedge pattern at around $41.40.
TP: Our target prices are $46 and $50 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $39.20. Note that this stop loss is on a closing basis.
Our target potential upside is almost 7% to 21% in the next 4-6 months.
- Entry at $41.40: For a risk of $2.20, our first target reward is $4.60 and the second target reward is $8.60. This is a 1:2 and 1:4 risk-reward trade.
- Entry at $43.08: For a risk of $3.88, our second target reward is $6.92. This is a 1:2 risk-reward trade.
Overall, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge pattern. 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.
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