The clinical-stage biopharmaceutical company that focuses on the development of therapeutic compounds through the inhibition of the complement system for autoimmune and inflammatory diseases, Apellis Pharmaceuticals Inc. (NASDAQ: APLS) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Channel Breakout: As you can see from the daily chart, the stock was trading within a trend channel during the past few months. This is marked in the daily chart in purple color. Currently, the stock has broken out of this channel. This is a possible bullish sign.
Daily Chart – APLS
#2 Trading Above MAs: The stock is currently trading above its 50-day SMA as well as 200-day SMA, which implies that the bulls are currently in control.
#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 bullishness.
#4 MACD above signal line: As you can see from the daily chart, the MACD line (blue color) is currently above the MACD signal line (orange color), indicating a bullish bias.
#5 Trendline support: The stock had broken out of the channel with high volume after taking support at the uptrend line, which is marked as a pink color dotted line. This is a possible bullish sign.
#6 Flag Pattern Breakout: As you can see from the weekly 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 pink color lines. 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). The stock has currently broken out of the flag pattern, indicating possible bullishness.
Weekly Chart – APLS
#7 Bullish ADX and DI: The ADX line has started to move up from below –DI and +DI lines. The +DI line and the ADX line are also currently above –DI line. This indicates possible bullishness.
#8 Bullish RSI: The weekly chart shows that the RSI is above 50 and moving higher, 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 APLS if it trades above the price of around $53.80.
TP: Our target prices are $60 and $65 in the near-term.
SL: To limit risk, place a stop loss near $50.10. Note that this stop loss is on a closing basis.
Our target potential upside is 12% to 21% in the next 3-6 months.
For a risk of $3.70, the target rewards are $6.20 and $11.20. 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 channel and flag 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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