The clinical-stage oncology company, which engages in developing a pipeline of oncology products to treat genetic, immunological and epigenetic drivers of cancer in subsets of cancer patients, Mirati Therapeutics Inc. (NASDAQ: MRTX) seem to be gearing up for a surge after correction as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: MRTX’s daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts a good support level.
Daily Chart – MRTX
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD above Signal Line: The MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#4 Bullish Stochastic: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line.
This is a possible bullish indication.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#6 Unbroken Uptrend: The weekly chart shows that the stock’s uptrend is unbroken, as it has been forming higher highs and higher lows.
Weekly Chart – MRTX
#7 Other Bullish Indications: There are also various other positive indications like the bullish Aroon, bullish MACD, bullish RSI, bullish stochastic, and price above MAs in the weekly chart. These all point to possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy price for MRTX is if the stock corrects to the breakout level of the ascending triangle pattern at around $80 or if the stock closes above the upper wick of the latest candlestick pattern, at around $97.
TP: Our target prices are $90 and $100 based on the breakout from the Ascending Triangle pattern. If the stock closes above $100, the next target price is $110.
SL: To limit risk, place a stop loss near $74.90 (for entry near $80) and $91 (for entry near $97). Note that the stop loss is on a closing basis.
Our target potential upside is 12% to 25% in the next 4-6 months.
- Entry at $80: For a risk of $5.10, the target rewards are $10.00 and $20.00. This is a nearly 1:2 and 1:4 risk-reward trade.
- Entry at $97: For a risk of $6.00, the target reward is $13.00. This is a nearly 1:2 risk-reward trade.
In other words, 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 ascending 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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