Veru Inc. (NASDAQ: VERU) seems to be poised for a price surge as per its latest charts. The oncology biopharmaceutical company focuses on developing medicines for the management of cancers.
The stock was also a part of our recent watchlist for breakout stocks.
Bullish Indications
#1 Downtrend Channel Breakout: As you can see from the daily chart, the stock has been trading within a downtrend channel for the past few days. This is marked in the daily chart in pink color. Currently, the stock has broken out of the downtrend channel and is moving higher. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
VERU – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below –DI and +DI lines. This indicates possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Falling Wedge Pattern Breakout: As you can see from the weekly chart, the stock was forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock has currently broken out of the falling wedge pattern and moved higher. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term. The stock is also trading above its 50-week and 200-week SMA, indicating bullishness.
VERU – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well. This is a possible bullish indication.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of VERU above the price of around $15.80.
TP: Our target prices are $21 and $24 in the next 3-6 months.
SL: To limit risk, place stop-loss below $13.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 33% to 52% in the next 3 to 6 months.
For a risk of $2.80, our target rewards are $5.20 and $8.20. 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 from the trend channel 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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