The biopharmaceutical company that discovers and develops medicines in areas of high unmet medical need, Nektar Therapeutics (NASDAQ: NKTR) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart of NKTR shows that the stock has been trading within a channel for the past few months. This channel is marked in the daily chart in pink color. Currently, the stock has broken out of this channel with high volume, indicating that it has the potential to surge ahead.
Daily Chart – NKTR
#2 Above MAs: The stock is currently trading above the long-term moving average of 200-day SMA as well as the short-term moving average of 50-day SMA. This indicates the overall bullishness of the stock.
#3 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color).
This indicates a possible bullish bias.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 Broken Downtrend: The weekly chart shows that the stock has currently broken out of a short-term downtrend.
This downtrend line is marked as a pink colored line. This is also a possible bullish sign.
Weekly Chart – NKTR
#6 Strong RSI: The RSI is currently above 50 and moving up in the weekly chart. This indicates the strength of the current upmove.
#7 Bullish Engulfing: The latest candlestick pattern in the weekly chart is a bullish engulfing pattern. This is marked as an orange ellipse. A bullish engulfing pattern is a bullish reversal pattern and usually implies that the stock may move higher soon.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of NKTR if it trades above Friday’s close. This translates to a price of around $26.95.
TP: Our target prices are $30 and $36 in the next 3-6 months.
SL: To limit risk, place a stop loss at $24.90. Note that this stop loss is on a closing basis.
Our target potential upside is almost 11% to 34% in the next 3-6 months.
For a risk of $2.05, our target rewards are $3.05 and $9.05. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x rewards when compares to risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel. 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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