The biotechnology company based in Carlsbad, California, Ionis Pharmaceuticals Inc. (NASDAQ: IONS) seems to be gearing up for a price surge according to its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: As seen in the daily chart, the stock had formed and broken out of a symmetrical triangle pattern. This pattern is marked in pink color dotted lines. This pattern is usually formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. It represents a period of consolidation before the price breaks out or breaks down. Once the stock breaks out of the symmetrical triangle pattern, it usually signifies the start of a new bullish trend.
Daily Chart – IONS
#2 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.
[hana-code-insert name=’adsense-article’ /]#3 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control
#4 Falling Wedge Pattern: As you can see from the daily chart, the stock has broken out of a falling wedge pattern.
This pattern is marked as purple lines.
The stock has typically taken support at the bottom of the wedge before bouncing back.
Once a stock breaks out from the wedge, it usually moves higher.
#5 Bullish RSI: The RSI is currently above 50 and moving up.
This is a possible bullish sign.
#6 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines. The +DI line is also currently above –DI line. This indicates possible bullishness.
#7 Flag Pattern: As you can see from the weekly chart, the stock was in a strong 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 orange color. 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). Typically, a retest of the flag pattern’s breakout level happens before resuming the trend.
Weekly Chart – IONS
#8 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the weekly chart, indicating possible bullishness.
#9 Bullish RSI: The RSI is currently moving up after reaching oversold levels. It has now crossed above 50, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of IONS at the current price of $69.08.
TP: Our first target price is $75 and the second target price is $85 in the next 4-6 months.
SL: To limit risk, place a stop loss at $65.10. Note that this stop loss is on a closing basis.
Our target potential upside is almost 9% to 23% in the next 4-6 months.
For a risk of $3.98, our first target reward is $5.92 and the second target reward is $1.92. This is a nearly 1:2 and 1:4 risk-rewards 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 symmetrical 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 the sector.
Happy Trading!
Tara
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