This Stock Looks Ready for an Upmove in the Near-Term

The oncology-focused biopharmaceutical company working to create best-in-class cancer therapies, Arcus Biosciences Inc. (NYSE: RCUS) seems to be ready for an upmove in the near term as per its latest charts.

Bullish Indications

#1 Channel Breakout: As you can see from the daily chart of RCUS below, the stock has been trading inside a channel for the past few months. This is marked in the daily chart in pink color. Currently, the stock has broken out of the channel after taking support at the lower end of the channel. It has also started moving up. This is a possible bullish sign.

Daily Chart – RCUS

#2 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.

#3 Price above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, indicating possible bullishness.

#4 Bullish MACD: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color).

This indicates a possible bullish setup.

#5 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines.

The +DI line is also currently above –DI line.

This indicates possible bullishness.

#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. The downtrend line is marked in purple color. This is a possible bullish sign.

Weekly Chart – RCUS

#7 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.

#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, 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 RCUS is if the stock corrects to the price of around $14.00.

However, you can purchase half the intended quantity of shares of RCUS if it trades above yesterday’s close, ideally around $15.90.

TP: Our target prices are $18 and $24 in the next 4-6 months.

SL: To limit risk, place a stop loss at $14.70 (for entry near $15.90) and $12.10 (for entry near $14.00) Note that this stop loss is on a closing basis.

Our target potential upside is 13% to 71% in the next 4-6 months.

  • Entry at $14.00: For a risk of $1.90, our target rewards are $4.00 and $10.00. This is a 1:2 and 1:5 risk-reward trade.
  • Entry at $15.90: For a risk of $1.20, our target rewards are $2.10 and $8.10. This is a 1:2 and 1:7 risk-reward trade.

In other words, this trade offers nearly 2x to 7x more potential upside than downside.

Risks to Consider
The stock may reverse its overall trend if it breaks down from the support level of the channel. 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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