MacroGenics Inc. (NASDAQ: MGNX) seems to be gearing up for a surge as per its latest charts. MacroGenics, Inc. is a biopharmaceutical company that discovers and develops antibody-based therapeutics to treat cancer in the United States.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock was recently forming a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as purple lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock has broken out of the symmetrical triangle pattern which is a possible bullish sign.
MGNX – Daily Chart
#2 Price above MA: The stock is currently trading above its 50-day SMA. This usually indicates a possible bullish bias for the stock.
#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
#4 Bullish ADX and DI: The daily chart shows that the +DI line is currently above the -DI line. The ADX line is also currently starting to move higher from below the -DI and +DI lines. This is a possible bullish sign.
#5 Bullish Stoch: The weekly chart shows that the %K line is currently above the %D line. This is a possible bullish sign.
#6 Consolidation Area, Ready for Breakout: The weekly chart shows that the stock has been trading within a range for the past several months. This area is marked as a pink color rectangle in the daily chart. A breakout from this consolidation area would indicate possible bullishness.
MGNX – Weekly Chart
#7 Bullish Stoch: The weekly chart shows that the %K line has crossed above the %D line. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of MGNX above the price of around $26.00. The remaining shares can be purchased above the price of $35.00. These are marked as green color dotted lines in the weekly chart.
TP: Our target prices are $35 and $50 in the next 4-6 months.
SL: To limit risk, place a stop loss at $21.00 (for entry near $26.00) and $25.00 (for entry near $35.00). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 35% to 92% in the next 4-6 months.
- Entry near $26.00: For a risk of $5.00, the target rewards are $9.00 and $24.00. This is a nearly 1:2 and 1:5 risk-reward trade.
- Entry near $35.00: For a risk of $10.00, our target reward (TP#2) is $15.00. This is a nearly 1:2 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 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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