Trevi Therapeutics, Inc. (NASDAQ: TRVI) seems poised for a price surge based on its latest charts. The clinical-stage biopharmaceutical company focuses on the development and commercialization of investigational therapy for the treatment of chronic cough in patients with idiopathic pulmonary fibrosis (IPF) and non-IPF interstitial lung disease, and refractory chronic cough.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has recently formed 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 purple lines. The breakout from a symmetrical triangle pattern usually signifies a bullish move. Currently, the stock has broken out of the symmetrical triangle pattern, which is a possible bullish sign.
TRVI – Daily Chart
#2 Price above MA: The price is currently above the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color), which is typically considered bullish.
#4 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#5 Flag Pattern Breakout: The weekly chart shows that the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in pink color. Currently, the stock has broken out of the flag. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case). The stock is also trading above its 50-week and 200-week SMA. All these are possible bullish indications.
TRVI – Weekly Chart
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart and is also moving higher from oversold levels. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of TRVI above the price of around $11.20.
TP: Our target prices are $13.50 and $15.00 in the next 3-6 months.
SL: To limit risk, place a stop-loss at $9.90. Note that the stop-loss is on a closing basis.
Our target potential upside is 21% to 34% in the next 3 to 6 months.
For a risk of $1.30, our target rewards are $2.30 and $3.80. 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 from the symmetrical triangle pattern 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
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