The clinical-stage biotechnology company developing innovative therapeutics targeting the hepatitis B virus (HBV) and diseases associated with the microbiome, Assembly Biosciences Inc. (NASDAQ: ASMB) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been trading within a downtrend channel during the past few months. This is marked in the daily chart in pink color. Currently, the stock has broken out of the downtrend channel with high volume. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
Daily Chart – ASMB
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA. This is a possible bullish sign.
[hana-code-insert name=’adsense-article’ /]#3 Above Support Level: As shown in the daily chart, there is support nearby for the stock, which is marked as a purple dotted line.
The stock is currently trading above this support.
This looks like a good area for the stock to bounce back upwards during corrections.
#4 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a bullish bias.
#5 Strong Stoch: The stochastic is currently moving up and the %K line is currently above the %D line. This usually indicates bullishness.
#6 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).
#7 Downtrend Broken: The weekly chart shows that the stock has currently broken out of the prevailing downtrend. The downtrend line is marked in purple color. This is a possible bullish sign.
Weekly Chart – ASMB
#8 Bullish RSI: The weekly chart shows that the RSI is moving up above 50 after reaching near oversold levels. This is a possible bullish sign.
#9 Bullish MACD: The MACD line (blue color) is currently above the MACD signal line (orange color) in the weekly chart as well. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ASBM above the 200-day SMA. This translates to a price of around $16.
TP: Our target prices are $22 and $30 in the next 4-6 months.
SL: To limit risk, place stop-loss at $12.20. Note that the stop-loss is on a closing basis.
Our target potential upside is 38% to 88% in the next 4 to 6 months.
For a risk of $3.80, our target rewards are $6.00 and $14.00. This is a nearly 1:2 and 1:4 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 from the downtrend channel 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.
Happy Trading!
Tara
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