The clinical-stage biotechnology company that develops oral therapeutic candidates for the treatment of hepatitis B virus (HBV) infection and novel class of oral synthetic live biotherapeutic candidates to treat disorders associated with the microbiome, Assembly Biosciences Inc. (NASDAQ: ASMB) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: ASMB’s daily chart shows that the stock had recently formed an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. Currently, the stock has broken out of the ascending triangle pattern, indicating possible bullishness.
Daily Chart – ASMB
#2 Trading Above MAs: The stock is currently trading above both its short-term moving average of 50-day and the long-term moving average of 200-day SMA, which implies that the bulls are currently in control. This is a possible bullish sign.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
#4 Bullish ADX: The ADX line has currently moved up from below –DI and +DI lines. The +DI line and the ADX line is also currently above –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. It has now started a new uptrend, as it has been recently forming higher highs and higher lows. The downtrend line is marked in purple color in the weekly chart below. This is a possible bullish sign.
Weekly Chart – ASMB
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ASMB is in two scenarios.
- If the stock corrects to the support level of the ascending triangle breakout, at around $24.50.
- If the stock trades above yesterday’s high at around $27.50.
TP: Our target prices are $32 and $35 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $20.30 (for entry near $24.50) and $24.70 (for entry near $27.50). Note that this stop loss is on a closing basis.
Our target potential upside is 16% to 43% in the next 3-5 months.
- Entry at $24.50: For a risk of $4.20, the target rewards are $7.50 and $10.50. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry at $27.50: For a risk of $2.80, the target rewards are $4.50 and $7.50. 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 with high volume from the ascending 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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