Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE) seems to be poised for a price surge as per its latest charts. The biopharmaceutical company focuses on the identification, acquisition, development, and commercialization of novel products for the treatment of rare and ultra-rare genetic diseases in North America, Latin America, Japan, Europe, and internationally. Its biologic products include Crysvita (burosumab); Mepsevii; Dojolvi; and Evkeeza (evinacumab).
Bullish Indications
#1 Falling Wedge Pattern: As you can see from the daily chart, the stock has been forming a falling wedge pattern for the past few weeks. These are marked as purple color lines. The stock currently looks poised for a breakout from the falling wedge pattern. A falling wedge is a bullish pattern and a breakout from it implies that the stock may move higher in the short term.
RARE – Daily Chart
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA indicating that the bulls are gaining control. This is a positive indication.
#3 Bullish ADX: The ADX indicator shows that the +DI line has currently crossed above the –DI line and the ADX line has started to move up from below the –DI and +DI lines. This indicates possible bullishness.
#4 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#5 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a strong support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher.
#6 %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.
RARE – Weekly Chart
#7 Bullish RSI: As seen in the weekly chart, the RSI is moving higher from oversold levels and is currently nearing 50. 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 shares of RARE above the price of around $38.00.
TP: Our target prices are $41 and $43 in the next 3-6 months.
SL: To limit risk, place stop-loss below $36.30. Note that the stop-loss is on a closing basis.
Our target potential upside is 8% to 13% in the next 3 to 6 months.
For a risk of $1.70, our target rewards are $3.00 and $5.00. 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 falling wedge 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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