The clinical-stage biopharmaceutical company that discovers and develops novel small molecule drugs for the treatment of autoimmune and central nervous system disorders, Concert Pharmaceuticals Inc. (NASDAQ: CNCE) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle pattern Breakout: CNCE’s daily chart shows that the stock has broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. A breakout from a bullish pattern like this usually indicates the possibility of an upmove in the near-term.
Daily Chart – CNCE
#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). This is typically considered a bullish sign.
#4 Bullish ADX and DI: The ADX indicator in the daily chart shows bullishness as the +DI line is above the -DI line and the ADX line is moving higher from below the +DI and -DI lines.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Consolidation and Breakout: The weekly chart shows that the stock had recently broken out of a downtrend and was within a consolidation area. This area is marked in a pink color rectangle in the weekly chart. Currently, the stock has broken out of this consolidation area. This is a strong bullish sign.
Weekly Chart – CNCE
#7 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines in the weekly chart. The +DI line is also currently above the –DI line. This indicates possible bullishness.
#8 Bullish Stoch: The %K line (blue line) is currently above the %D line (orange line) of the stochastic in the weekly chart as well. This usually indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of CNCE above the price of $13.50.
TP: Our target prices are $15 and $18 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $12.50. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 11% to 33% in the next 3-5 months.
For a risk of $1.00, the target rewards are $1.50 and $4.50. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 5x 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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