The clinical-stage immunotherapy company that develops therapies for the treatment of cancer, Jounce Therapeutics Inc. (NASDAQ: JNCE) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Flag Breakout: As you can see from the daily chart, the stock was in a strong 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).
Daily Chart – JNCE
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This is a possible bullish sign.
#3 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 possible bullishness.
#4 Bullish MACD: The MACD (light blue color) is currently above the MACD signal line (orange color), indicating possible bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX has started to move up from below both (+DI) and (-DI).
#6 Trend Channel Breakout: As you can see from the weekly chart, the stock was trading within a channel during the past few months. This is marked in the chart in pink color. Currently, the stock has broken out of the uptrend channel and has moved higher. Once the stock breaks out from a channel, it has the potential to move further up.
Weekly Chart – JNCE
#7 MACD above Signal Line: The weekly chart also shows that the MACD (light blue color) is currently above the MACD signal line (orange color). This typically indicates a bullish setup.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of JNCE if it stays above the price of $14.10.
TP: Our target prices are $17 and $20 in the next 4-6 months.
SL: To limit risk, place stop-loss at $12.30. Note that the stop-loss is on a closing basis.
Our target potential upside is 21% to 42% in the next 4 to 6 months.
For a risk of $1.80, our target rewards are $2.90 and $5.90. 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 from the trend channel breakout level 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
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