Bristol-Myers Squibb Co (NYSE: BMY) seems to be getting ready for a price bump in the short-term as per the latest charts. BMS is one of the world’s largest pharmaceutical companies and is consistently ranked on the Fortune 500 list of the largest U.S. corporations
Bullish Move – Chart Indications
#1 Flag Pattern 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. 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). Currently, the stock has broken out of the flag pattern, indicating possible bullishness.
BMY – Daily Chart
#2 Price above MAs: The stock is currently above the 50-day as well as 200-day SMA, indicating that the bulls currently have an upper hand.
#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 the (+DI) line, as well as the ADX line, are currently above the (-DI) line.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line, and is moving higher from oversold levels. This is a possible bullish sign.
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of a downtrend and is currently moving higher. The downtrend line has been marked in pink color. The stock is also trading above its 50-week as well as 200-week SMA. All these are possible bullish indications.
BMY – Weekly Chart
#7 Bullish MACD: The MACD line is above the MACD Signal line in the weekly chart as well, indicating possible bullishness.
#8 Bullish ADX and DI: The weekly chart shows that the +DI line has crossed above the -DI line and the ADX line is currently above the +DI and -DI lines. This is a bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BMY is above $65.30.
TP: Our target prices are $68 and $73 in the next 3 to 6 months.
SL: To limit risk, place a stop loss below $63.50. Note that the stop loss is on a closing basis.
Our target potential upside is 4% to 12% in the next 3-6 months.
For a risk of $1.80, our first target reward is $2.70 and the second target reward is $7.70. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the flag pattern 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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