The biopharmaceutical company focused on the discovery, development, and commercialization of RNA interference therapeutics for genetically defined diseases, Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY) seem to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has broken out of a Symmetrical Triangle pattern. This pattern is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This is marked on the daily chart as purple lines. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
Daily Chart – ALNY
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
[hana-code-insert name=’adsense-article’ /]#3 %K above %D: The %K line of the stochastic is currently above the %D line in the daily chart, indicating possible bullishness.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and ADX has started rising from below both (+DI) and (-DI).
#5 Bullish RSI: The RSI is above 50 and moving up, indicating the strength of the current upmove.
#6 Flag Pattern: The weekly chart shows that the stock was in a strong uptrend after which it started consolidating and was in a narrowing range.
This is a classic flag pattern and is marked in the chart below in pink 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). The stock is also trading above its 50-week and 200-weeks SMA, indicating possible bullishness.
Weekly Chart – ALNY
#7 MACD above Signal Line: As you can see from the weekly chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#8 Bullish Aroon: The Aroon indicator denotes bullishness, as the value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ALNY at the current price of $93.45.
TP: Our target prices are $110 and $120 in the next 3-5 months. If the stock faces resistance when attempting to cross above 110, you can exit half your holdings at that price.
SL: To limit risk, place a stop loss at $84. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 18% to 28% in the next 3-6 months. For a risk of $9.45, the target rewards are $16.55 and $26.55. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical triangle 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 its sector.
Happy Trading!
Tara
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