The Bridgewater, New Jersey-based American publicly traded generics and specialty pharmaceutical company, Amneal Pharmaceuticals Inc. (NYSE: AMRX) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart of AMRX shows that the stock was trading within a falling wedge pattern for the past few months. This is marked in the daily chart in purple color. The stock had recently broken out of the falling wedge pattern. A falling wedge pattern is a bullish pattern and a breakout from this pattern shows that the stock has gained momentum and has the potential to move further up.
Daily Chart – AMRX
#2 Trading Above MA: The stock is currently trading above its 50-day moving average, indicating a possible bullish bias for the stock.
[hana-code-insert name=’adsense-article’ /]#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a possible bullish sign.
#4 Bullish ADX and DI: The ADX indicator shows bullishness as (+DI) is greater than (-DI) and the ADX line is rising.
This points to a possible upmove in the near-term.
#5 Bullish Stochastic: As you can see from the daily chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. AMRX had taken support at the 23.6% Fibonacci support level as seen in the weekly chart. So, this seems like a good area for the stock to bounce upwards.
Weekly Chart – AMRX
#7 MACD crossover: In the weekly chart, the MACD (light blue color) had currently crossed above the MACD signal line (orange color) and has started to move upwards. A potential buy signal is generated when the MACD line crosses above the MACD Signal Line. This indicates a possible bullish setup.
#8 Bullish Stochastic: In the weekly chart as well, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of AMRX at the current price of $13.99.
TP: Our target prices are $18 and $24 in the next 3 to 6 months.
SL: To limit risk, place a stop loss below $12.30. Note that this stop loss is on a closing basis.
Our target potential upside is almost 27% to 72% in the next 3-6 months. For a risk of $1.69, our first target reward is $4.01 and the second target reward is $10.01. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers nearly 2x to 6x 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 breakout level. 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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