The company that develops drugs of small molecule kinase inhibitors that target genomic drivers in genomically defined cancers, rare diseases, and cancer immunotherapy, Blueprint Medicines Corp (NASDAQ: BPMC) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: BPMC’s daily chart shows that the stock has 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. 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.
Daily Chart – BPMC
#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.
#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 as a bullish bias.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX has started to move up from below (+DI) and (-DI).
#5 IH&S Pattern Breakout: From the weekly chart, we can see that the stock has been consolidating in the form of an Inverted Head and Shoulders (IH&S) pattern. This is marked in the chart in orange color. An IH&S pattern is a bullish pattern. A breakout from an IH&S pattern is usually the sign of an upcoming bullish move. Currently, the stock has broken out of an IH&S pattern, which is a possible bullish sign.
Weekly Chart – BPMC
#6 MACD above Signal Line: In the weekly chart as well, the MACD line is above the MACD signal line which is a bullish signal. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
#7 Bullish Stoch: The weekly chart shows that the %K of the stochastic is above the %D line, which is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BPMC is if the stock corrects to the breakout level of the IH&S pattern, at around $80.00 to $82.00.
For those with a higher risk appetite, you can purchase half the intended quantity of shares of BPMC if it trades above yesterday’s high, at around $88.
TP: Our target prices are $93 and $100 in the next 3 to 6 months.
SL: To limit risk, place a stop loss near $74.00 (for entry near $81) and $80.00 (for entry near $88). Note that this stop loss is on a closing basis.
Our target potential upside is 14% to 23% in the next 3-6 months.
- Entry near $81: For a risk of $7.00, the target rewards are $12.00 and $19.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $88: For a risk of $8.00, the target reward (TP#2) is $12.00. This is a nearly 1:2 risk-reward trade.
In other words, this trade offers nearly 2x to 3x 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.
Happy Trading!
— Tara
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