The biopharmaceutical company focused on the discovery, development, and commercialization of RNA interference therapeutics for genetically defined diseases, Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, ALNY was trading within a falling wedge pattern during the past few weeks. This is marked in the daily chart in pink color. Currently, the stock has broken out of the falling wedge pattern. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up.
Daily Chart – ALNY
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.
#3 Above MAs: In the daily chart, the stock is currently trading above its 50-day as well as 20-day SMA. This implies that the bulls are currently in control.
#4 Bullish Stochastic: The daily chart shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than (-DI), and ADX has started to move up from below (-DI) and (+DI).
#6 Double Bottom Pattern Breakout: The weekly chart shows that the stock had recently broken out of a double bottom pattern. This double bottom pattern is marked in the weekly chart in purple color. A double bottom pattern is a bullish reversal pattern and the breakout from it usually indicates that the stock could possibly move upwards.
Weekly Chart – ALNY
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ALNY is if the stock corrects to the breakout level of the double bottom pattern, at around $146.50. However, you can purchase half the intended quantity of shares of ALNY above yesterday’s close. This translates to a price of around $157.50.
TP: Our target prices are $165 and $180 in the next 4-6 months.
SL: To limit risk, place stop-loss at $152.40 (for entry near $157.50) and $135.50 (for entry near $146.50). Note that the stop loss is on a closing basis.
Our target potential upside is 4% to 23% in the next 4-6 months.
- Entry near $146.50: For a risk of $11.00, our target rewards are $18.50 and $33.50. This is an almost 1:2 and 1:3 risk-reward trade.
- Entry near $157.50: For a risk of $5.10, our target rewards are $7.50 and $22.50. This is an almost 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 falling wedge pattern 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