Allogene Therapeutics, Inc. (NASDAQ: ALLO) seems to be poised for a price surge as per its latest charts. ALLO is a clinical stage immuno-oncology company that develops and commercializes genetically engineered allogeneic T cell therapies for the treatment of cancer. It develops, manufactures, and commercializes UCART19, ALLO-501, and ALLO-501A.
The stock was also a part of our recent watchlist for breakout stocks.
#1 Channel Breakout: 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 pink color. The daily chart shows that the stock has currently broken out of the 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 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a support level. This level is marked as a purple dotted line. This looks like a good area for the stock to move higher.
#7 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
#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 ALLO above the price of around $11.90.
TP: Our target prices are $14 and $16 in the next 3-6 months.
SL: To limit risk, place stop-loss at $10.60. Note that the stop-loss is on a closing basis.
Our target potential upside is 18% to 34% in the next 3 to 6 months.
For a risk of $1.30, our target rewards are $2.10 and $4.10. 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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