The American biotechnology company headquartered in Tarrytown, New York, Regeneron Pharmaceuticals Inc (NASDAQ: REGN) seems to be poised for a decline in its price in the near term as per its latest charts.
Bearish Indications
#1 Channel Breakdown: The daily chart shows that REGN has recently broken down from an uptrend channel that was formed during the past few months. This is a bearish sign. The channel is marked in purple color lines in the daily chart. Once a stock breaks down from a channel, it typically moves lower in the near-term.
Daily Chart – REGN
#2 MACD below signal line: The MACD line (blue color) has currently crossed below the MACD signal line (orange color), indicating bearishness.
#3 CCI Moving Down: The CCI is currently moving down after reaching near 200.
This usually means that the stock may reverse to the downside soon.
#4 Bearish RSI: The RSI is currently moving down from overbought levels and is currently below 50, which is a possible bearish sign.
#5 Supply area: The weekly chart shows that the stock is currently near a supply area, as it was not able to cross above the resistance level even after multiple attempts. This area is marked as a purple color ellipse. This indicates possible bearishness.
Weekly Chart – REGN
#6 Bearish Stochastic: The stochastic in the weekly chart is near overbought levels and moving down. The %K line has also crossed below the %D line. All these indicate possible bearishness.
#7 Bearish RSI: The weekly chart shows that the RSI is moving down from overbought levels and has been forming lower lows and lower highs. This indicates an overall bearishness.
#8 Bearish MACD: In the weekly chart as well, the MACD line is below the MACD signal line, indicating overall bearishness.
#9 RSI-Price bearish divergence: The weekly chart shows that there is a bearish divergence between the RSI and price. This is marked as orange color dotted lines. While the price was making higher highs, the RSI was forming lower highs. This is a possible bearish sign.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can take short positions on REGN if it trades below the 50-day moving average. This translates to a price of around $616.
TP: Our target prices are $600 and $580 in the next 3-6 months.
SL: To limit risk, place a stop loss at $627.00. Note that this stop loss is on a closing basis.
Our target potential downside is 3% to 6% in the next 3-6 months.
For a risk of $11.00, our target rewards are $16.00 and $36.00. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks upwards from the channel with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
— Tara
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