The North Carolina-based clinical-stage biopharmaceutical company, G1 Therapeutics Inc. (NASDAQ: GTHX) 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, the stock had recently formed a symmetrical triangle pattern. This pattern is shown as pink color lines. This pattern represents a period of consolidation before the price breaks out and 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 – GTHX
#2 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
[hana-code-insert name=’adsense-article’ /]#3 Above MA: The stock is currently trading above both 50-day SMA, indicating that the bulls are currently in control.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is moving up from below (-DI) and (+DI).
#5 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#6 Support Area: The weekly chart shows that the stock had bounced back after reaching near the support area.
This support level is marked as a green dotted line. This seems like a good area for the stock to move higher.
Weekly Chart – GTHX
#7 %K above %D in Stochastics: The stochastics oscillator shows that the %K (blue) line is currently above the %D (orange) line in the weekly chart as well. This indicates possible bullishness.
#8 MACD above Signal Line: The weekly chart also shows that the MACD line (blue color) is currently above the signal 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 shares of GTHX in either of the two scenarios
- Above the resistance level of around $29.
- If the stock corrects to the breakout level of the symmetrical triangle pattern at around $21.
TP: Our target prices are $35 and $45 in the next 4-6 months.
SL: To limit risk, place a stop loss at $18 (for entry near $21) and $25.10 (for entry near $29). Note that this stop loss is on a closing basis.
Our target potential upside is almost 21% to 114% in the next 4-6 months.
- Entry near $21: For a risk of $3.00, our target rewards are $14.00 and $24.00. This is an almost 1:5 and 1:8 risk-reward trade.
- Entry near $29: For a risk of $3.90, our target rewards are $6.00 and $16.00. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 8x 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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