The biotechnology company that develops novel oncology therapies designed to target the tumor microenvironment and licenses a novel drug delivery technology through corporate partnerships, Halozyme Therapeutics, Inc. (NASDAQ: HALO) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#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 pink color lines. A breakout from an ascending triangle pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
Daily Chart – HALO
#2 Trading above MAs: The price is currently above both the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA. This implies a possible bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) has crossed above the signal line (orange color). This is a possible bullish setup.
#4 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. This is marked on the daily chart as purple color lines. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. A breakout from this pattern is a possible bullish sign.
#5 Bullish ADX: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX line is also currently above –DI line. This indicates possible bullishness.
#6 Flag Pattern Breakout: The weekly chart shows that the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. Currently, the stock has broken out of the flag. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
Weekly Chart – HALO
#8 Bullish Stoch: The weekly chart shows that the %K line of the stochastic has crossed above the %D line. This is also 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 HALO is above yesterday’s close. This translates to a price of around $30.70.
TP: Our target prices are $34 and $38 in the next 3-6 months.
SL: To limit risk, place a stop loss at $28.50. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 11% to 24% in the next 3-6 months.
For a risk of $2.20, the target rewards are $3.30 and $7.30. This is a nearly 1:2 and 1:3 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 as well as the symmetrical 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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