The American company devoted to the development and production of materials used in the manufacture of biological drugs, Repligen Corporation (NASDAQ: RGEN) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, RGEN had recently formed a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out.
This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Daily Chart – REGN
#2 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the daily chart, indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Above MAs: The stock is currently trading above the 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has moved up from below both (+DI) and (-DI).
#6 Unbroken Uptrend: The uptrend is currently unbroken as the stock has been forming higher highs and higher lows in the weekly chart.
This is marked in purple color line in the weekly chart. This is a possible bullish sign.
Weekly Chart – REGN
#7 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart as well, indicating possible bullishness.
#8 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. RGEN had taken support at the 50% Fibonacci support level as seen in the weekly chart. So, this seems like a strong support area for the stock.
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 stocks above the previous high of $70.50. The rest of the shares can be purchased if the stock corrects to the breakout level of the symmetrical triangle pattern at around $60.
TP: Our target prices are $80 and $85 in the next 4-6 months.
SL: To limit risk, place a stop loss at $57.40 (for entry at $60) and $65.20 (for entry at $70.50). Note that this stop loss is on a closing basis.
Our target potential upside is almost 14% to 42% in the next 4-6 months.
- Entry at $60: For a risk of $2.60, our target rewards are $20.00 and $25.00. This is an almost 1:8 and 1:10 risk-reward trade.
- Entry at $70.50: For a risk of $5.30, our target rewards are $9.50 and $14.50. This is an almost 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 10x 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 the sector.
Happy Trading!
Tara
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