The clinical-stage immunotherapy company that develops immunotherapeutic treatments for cancer and viral infectious diseases in the United States, Nantkwest Inc. (NASDAQ: NK) seems to be gearing up for a surge as per its latest charts.
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level.
#2 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#4 MACD above Signal Line: The MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
#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 bullishness.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a green color dotted line. This is a possible bullish indication.
#7 Bullish MACD: The MACD line is above the signal line in the weekly chart as well, indicating overall bullishness for the stock.
#8 Bullish ADX and DI: In the weekly chart as well, the ADX and +DI line are above the -DI line, indicating the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for NK is if the stock corrects to the breakout level of the ascending triangle pattern at around $7.60. However, you can purchase half the intended quantity of shares of NK if the stock trades above the price of around $12.00.
TP: Our target prices are $14 and $17 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $6.10 (for entry near $7.60) and $8.60 (for entry near $12.00). Note that the stop loss is on a closing basis.
Our target potential upside is 41% to 124% in the next 4-6 months.
- Entry at $7.60 For a risk of $1.50, the target rewards are $6.40 and $9.40. This is a nearly 1:4 and 1:6 risk-reward trade.
- Entry at $12.00: For a risk of $3.40, the target reward (TP#2) is $5.00. This is a nearly 1:2 risk-reward trade.
In other words, this trade offers nearly 2x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the ascending triangle pattern. 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.
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