Seagen Inc. (NASDAQ: SGEN) seems to be poised for a price surge as per its latest charts. Seagen is an American biotechnology company focused on developing and commercializing innovative, empowered monoclonal antibody-based therapies for the treatment of cancer.
#1 Breakout from Downtrend Channel: As you can see from the daily chart, the stock has been trading within a downtrend channel during the past few months. This is marked in the daily chart in purple color. Currently, the stock is moving higher after breaking out of downtrend channel. Once the stock breaks out from a downtrend channel, it has the potential to move further up.
#2 Price above MA: The price is currently above the short-term moving average of 50-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 Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates 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 38.20% Fibonacci support level before moving higher, as seen in the weekly chart. The stock is also trading above its 200-week SMA. All these indicate bullishness.
#7 %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.
#8 Bullish RSI: In the weekly chart, 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 SGEN above the price of around $149.60.
TP: Our target prices are $161 and $172 in the next 3-6 months.
SL: To limit risk, place stop-loss at $143. Note that the stop-loss is on a closing basis.
Our target potential upside is 8% to 15% in the next 3 to 6 months.
For a risk of $6.60, our target rewards are $11.40 and $22.40. 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.
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