SIGA Technologies, Inc. (NASDAQ: SIGA) seems to be poised for a price surge as per its latest charts. The company focuses on the health security and infectious disease markets in the United States. Its lead product is TPOXX, an oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock had recently broken out a Symmetrical Triangle pattern with historic high volume. A symmetrical triangle pattern 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 color lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move.
SIGA – 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 Uptrend Channel Breakout: As you can see from the weekly chart, the stock has been trading within an uptrend channel for the past several months. This is marked on the chart in pink color lines. The stock has currently broken out of the uptrend channel. Once a stock breaks out from a channel, it has the potential to move further up. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
SIGA – Weekly Chart
#7 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 SIGA above the price of around $12.45.
TP: Our target prices are $16 and $18 in the next 1-6 months.
SL: To limit risk, place stop-loss at $10.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 29% to 45% in the next 3 to 6 months.
For a risk of $1.95, our target rewards are $3.55 and $5.55. 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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