Ocular Therapeutix Inc. (NASDAQ: OCUL) seems to be getting ready for a price bump in the short term as per the latest charts. Ocular Therapeutix, Inc. is a biopharmaceutical company that focuses on the formulation, development, and commercialization of therapies for diseases and conditions of the eye using its bioresorbable hydrogel platform technology.
Bullish Move – Chart Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been forming a downtrend channel during the past several months. This is marked in pink color in the daily chart below. The stock had typically taken support at the bottom of the channel before bouncing back. The stock has currently broken out of the downtrend channel, indicating possible bullishness.
OCUL – Daily Chart
#2 Price above MA: The stock is currently above the 50-day SMA, indicating that the bulls have currently gained control.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI) and the ADX line has started rising from below both (+DI) and (-DI).
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. The stock had taken support at the 38.2% Fibonacci support level before moving higher, as seen in the weekly chart. This is a possible bullish sign. The stock is also trading above its 200-week SMA, indicating that the bulls are still in control.
OCUL – Weekly Chart
#7 Bullish RSI: The RSI is currently moving higher from oversold levels and is nearing 50. This indicates possible bullishness.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, and is also moving higher from oversold levels, 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 OCUL above the price of around $12.25.
TP: Our target prices are $17 and $20 in the next 3 to 6 months.
SL: To limit risk, place a stop loss at $9.60. Note that the stop loss is on a closing basis.
Our target potential upside is 39% to 63% in the next 3-6 months.
For a risk of $2.65, our target rewards are $4.75 and $7.75. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend channel breakout level with 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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