The biopharmaceutical company that focuses on the identification, acquisition, development, and commercialization of novel products for the treatment of rare and ultra-rare genetic diseases, Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: RARE’s daily chart shows that the stock had recently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in pink color. Currently, the stock seems to be consolidating near the breakout level before the next upmove.
Daily Chart – RARE
#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 Bullish Stoch: The %K line of the stochastic is currently above the %D line, indicating bullishness.
#4 Bullish ADX: The ADX line has currently started to move up from below –DI and +DI lines. The +DI line, and the ADX line is also above –DI line. These indicate possible bullishness.
#5 Bullish RSI: The RSI is currently above 50 and moving higher. This indicates the strength of the current bullish move.
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of the prevailing downtrend. This downtrend line is marked in purple color. This is a possible bullish indication.
Weekly Chart – RARE
#7 Above MAs: The stock is currently trading above its 50-week as well as 200-week SMA. This is also a possible bullish sign.
#8 MACD Above Signal Line: In the weekly chart, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
#9 Breakout From Resistance Area: The weekly chart shows that the stock has broken out of a resistance level, which is marked as a green color dotted line. This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for RARE is if it trades above the price of $96.40.
TP: Our target prices are $105 and $120 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $91.00. Note that this stop loss is on a closing basis.
Our target potential upside is 10% to 24% in the next 3-5 months.
For a risk of $5.40, the target rewards are $8.60 and $23.60. 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 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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