The clinical-stage biopharmaceutical company, which engages in the business of researching, developing, manufacturing and marketing biopharmaceutical products, Immunomedics, Inc. (NASDAQ: IMMU) seem to be poised for a price surge as per its latest charts.
#1 Symmetrical Triangle Pattern Breakout: As you can see from the daily chart, the stock has been trading within a symmetrical triangle pattern during the past few months. This is marked in the daily chart in purple color. 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 pattern, indicating that it has the potential to move further up.
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This is a possible bullish sign.
#4 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart.
This typically indicates a bullish setup.
#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 (-DI).
#6 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. IMMU has taken support at the 38.2% Fibonacci support level of the upmove, as seen in the weekly chart. This is a possible bullish sign.
#7 MACD above Signal Line: The weekly chart also shows that the MACD (light blue color) is currently above the MACD signal line (orange color). This typically indicates a bullish setup.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for IMMU is if it corrects to the breakout level of the symmetrical triangle pattern at around $14. However, you can purchase half the intended quantity of shares of IMMU at the current price of $15.59.
TP: Our target prices are $20 and $27 in the next 4-6 months.
SL: To limit risk, place stop-loss at $12.80. Note that the stop-loss is on a closing basis.
Our target potential upside is 28% to 93% in the next 4 to 6 months.
- Entry at $14: For a risk of $1.20, our target rewards are $6.00 and $13.00. This is a nearly 1:5 and 1:11 risk-reward trade.
- Entry at $15.59: For a risk of $2.79, our target rewards are $4.41 and $11.41. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 11x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the symmetrical triangle breakout level with a high volume. 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.
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