The biopharmaceutical company that develops novel products to target cardiovascular disease, galactosemia, and diabetic complications, Applied Therapeutics Inc. (NASDAQ: APLT) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Trendline support: As you can see from the daily chart, the stock has been on an uptrend, as it has been forming higher highs and higher lows for the past several months. This trendline is shown in purple color in the daily chart below. The stock is currently moving up after taking support on the trendline. This is a possible bullish sign.
Daily Chart – APLT
#2 Price above MAs: The daily chart shows that the stock has currently closed above its 50-day SMA as well as 200-day SMA. This is also a bullish sign.
#3 MACD above Signal Line: The daily chart shows that the MACD (light blue color) is currently above the MACD signal line (orange color).
This is a possible bullish indication.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) as well as the ADX lines are currently greater than (-DI), and ADX has started to move up from below (-DI) and (+DI).
#5 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart, indicating possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. APLT had taken support at the 38.2% Fibonacci support level and bounced higher as seen in the weekly chart. The stock is currently above the 61.8% Fibonacci level. So, this seems like a good support area for the stock to bounce upwards.
#7 RSI moving up: The RSI is nearing 50 and moving up on the weekly chart, indicating strength.
#8 Bullish Stoch: The %K line of the stochastic is above the %D line in the weekly chart as well. The stochastic indicator is also moving up from oversold levels. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of APLT if it trades above yesterday’s close. This translates to a price of around $40.65.
TP: Our target prices are $45 and $50 in the next 4 to 6 months.
SL: To limit risk, place the stop loss below $38. Note that stop loss is on a closing basis.
Our target potential upside is 11% to 23% in the next 4-6 months.
For a risk of $2.65, our target rewards are $4.35 and $9.35. This is a 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 trendline support 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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