Radius Health Inc. (NASDAQ: RDUS) seems to be poised for a price surge as per its latest charts. The company focuses on addressing unmet medical needs in the areas of bone health, orphan diseases, and oncology.
The company’s commercial product is TYMLOS, an abaloparatide injection. It is also developing abaloparatide-SC for the treatment of osteoporosis in men; abaloparatide-TD, a transdermal system to treat postmenopausal women with osteoporosis; Elacestrant (RAD1901), a selective estrogen receptor degrader, and RAD011 for treatment of hyperphagia related to Prader-Willi syndrome.
#1 Double Bottom Pattern Breakout: As you can see from the daily chart below, the stock had recently broken out of a double bottom pattern. This is marked in purple color. A double bottom pattern is a bullish reversal pattern, and a breakout from it indicates that the stock could move upwards.
#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 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 an orange color dotted line. This looks like a good area for the stock to move higher.
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well, and is also moving higher from oversold levels. 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 RDUS above the price of around $10.90.
TP: Our target prices are $14 and $18 in the next 3-6 months.
SL: To limit risk, place stop-loss at $9.10. Note that the stop-loss is on a closing basis.
Our target potential upside is 28% to 65% in the next 3 to 6 months.
For a risk of $1.80, our target rewards are $3.10 and $7.10. 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 double bottom 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.
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