GSK plc (NYSE: GSK) seems to be poised for a price surge as per its latest charts. The company, formerly GlaxoSmithKline plc, engages in the creation, discovery, development, manufacture, and marketing of pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products in the United Kingdom, the United States, and internationally. It operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare.
Bullish Indications
#1 Symmetrical Triangle Pattern: The daily chart shows that the stock had recently formed 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 color lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock looks poised for a breakout from the symmetrical triangle pattern which is a possible bullish sign.
GSK – Daily Chart
#2 Price above MA: The price is currently above the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#4 Bullish RSI: The RSI is above 50 and moving higher in the daily chart. This indicates possible bullishness.
#5 Uptrend Channel: 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 in the chart in pink color lines. 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.
GSK – Weekly Chart
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
#7 Bullish RSI: In the weekly chart as well, the RSI is currently above 50 and moving higher. 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 the shares of GSK above the price of around $45.10.
TP: Our target prices are $48 and $52 in the next 3-6 months.
SL: To limit risk, place stop-loss below $43.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 6% to 15% in the next 3 to 6 months.
For a risk of $1.60, our target rewards are $2.90 and $6.90. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the symmetrical triangle pattern 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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