The clinical-stage biopharmaceutical company that discovers and develops therapeutics to address serious unmet medical needs in patients with cancers associated with abnormal gene expression or drug resistance, Constellation Pharmaceuticals Inc. (NASDAQ: CNST) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Downtrend Broken: As you can see from the daily chart, the stock was in a downtrend for the past few months. This downtrend line has been marked in pink color. Currently, the stock has broken out of this downtrend with a high volume, indicating bullishness.
Daily Chart – CNST
#2 Price above MAs: The stock is currently above the 50-day as well as 200-day SMA, indicating that the bulls are currently in control.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and the ADX line has started rising from below both (+DI) and (-DI).
#6 Double Bottom Pattern: The weekly chart shows that the stock is forming a double bottom pattern. This is marked in the chart in purple color. A double bottom pattern is a bullish reversal pattern and a breakout from it would indicate that the stock could move upwards.
Weekly Chart – CNST
#7 Bullish MACD: The MACD line is above the signal line in the weekly chart and is also moving higher from oversold levels. All these indicate a possible bullish bias.
#8 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.
#9 Bullish ADX and DI: The weekly chart shows that the +DI line has crossed above the -DI line, indicating overall bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CNST is if it trades above yesterday’s close. This translates to a price of around $31.
TP: Our target prices are $40 and $50 in the next 2 to 6 months.
SL: To limit risk, place a stop loss at $25.00. Note that the stop loss is on a closing basis.
Our target potential upside is 29% to 61% in the next 3-6 months.
For a risk of $6.00, our target rewards are $9.00 and $19.00. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend line with high volume. 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