The clinical-stage biopharmaceutical company which engages in the research and development of medicines for the treatment of cancer, Kura Oncology Inc. (NASDAQ: KURA) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Channel Breakout: As you can see from the daily chart, the stock has been trading within a channel during the past few months. This is marked in the daily chart in purple color. Currently, the stock has broken out of the channel. Once a stock breaks out from a channel, it has the potential to move further up.
Daily Chart – KURA
#2 Price above MAs: The price is currently above both 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.
#3 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 bullish.
#4 Bullish ADX: The ADX line has started to move up from below –DI and +DI lines.
The +DI and ADX lines are also currently above –DI line.
This indicates possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The weekly chart shows that the stock had taken support at the 23.6% Fibonacci support level before moving higher to close above the 50% Fibonacci support level. This seems like a good support area for the stock.
Weekly Chart – KURA
#7 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 KURA is around $12.50. However, for those with a higher risk appetite, you can purchase half the intended quantity of shares of KURA above $16.10. These buy levels are shown as pink color dotted lines in the daily chart.
TP: Our target prices are $20 and $25 in the next 4-6 months.
SL: To limit risk, place stop-loss at $9.10 (for entry near $12.50) and 414.20 (for entry near $16.10). Note that the stop-loss is on a closing basis.
Our target potential upside is 21% to 100% in the next 4 to 6 months.
- Entry near $12.50: For a risk of $3.40, our target rewards are $7.50 and $12.50. This is a 1:2 and 1:4 risk-reward trade.
- Entry near $16.10: For a risk of $2.30, our target rewards are $3.50 and $8.50. 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 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