The American biotechnology company focused on the discovery, development, and commercialization of synthetic DNA products for treating cancers and infectious diseases, Inovio Pharmaceuticals Inc. (NASDAQ: INO) seem to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as orange color lines. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
Daily Chart – INO
#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. This usually implies a possible bullish bias for the stock.
#3 Channel Breakout: The daily chart shows that the stock had formed a trend channel in the last few months.
This is marked as purple color lines.
Currently, the stock has broken out from the upper rail of this trend channel.
Once the stock breaks out of a channel, it usually moves higher.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX is starting to move up from below (-DI) and (+DI).
#5 Bullish MACD: The MACD line is above the MACD signal line in the daily chart, indicating possible bullishness.
#6 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.
#7 Downtrend Broken: The weekly chart shows that the stock had broken out of a downtrend. This is marked as a pink color line. The stock has since then commenced an uptrend. This is a possible bullish sign.
Weekly Chart – INO
#8 Other bullish signs: The weekly chart shows a bullish stochastic, bullish MACD, and bullish ADX and DI. The stock is also trading above its 50-week as well as 200-week SMA. All these are bullish indications.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for INO is if it corrects to the price of around $15. However, you can purchase half the intended quantity of shares of INO if it trades above yesterday’s close, translating to a price of around $21.70.
TP: Our target prices are $25 and $30 in the next 3-6 months.
SL: To limit risk, place a stop loss at $9.40 (for entry near $15.00) and $19.50 (for entry near $21.70). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 15% to 100% in the next 3-6 months.
- Entry near $15.00: For a risk of $5.60, the target rewards are $10.00 and $15.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $21.70: For a risk of $2.20, our target rewards are $3.30 and $8.30. 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 with high volume from the symmetrical triangle pattern. 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 its sector.
Happy Trading!
Tara
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