The pharmaceutical company headquartered in Durham, North Carolina, that focuses on orphan & autoimmune diseases, and antivirals, BioCryst Pharmaceuticals, Inc. (NASDAQ: BCRX) seems to be gearing up for a surge as per its latest charts.
#1 Ascending Triangle Pattern Breakout: The daily chart of BCRX shows that the stock has broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. The breakout level of the ascending triangle pattern generally acts as a good support level.
#2 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 Bullish Stoch: The %K line is above the %D line of the stochastic, indicating possible bullishness.
However, it is currently near overbought levels, indicating that a correction may be imminent before the next upmove.
#5 Bullish Aroon: In the weekly chart, the value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates bullishness.
#6 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is also a possible bullish sign.
#7 Rounding Bottom Pattern: As seen from the weekly chart, the stock has currently broken out of a rounding bottom pattern. This pattern is marked in orange color. A Rounding Bottom (saucer bottom) is a long-term reversal pattern. It represents a long consolidation period that turns from a bearish bias to a bullish bias. A breakout from this pattern indicates that the stock may move higher. Currently, the stock has moved above the breakout level of the rounding bottom pattern.
#8 Price Above MAs: In the weekly chart as well, the stock is currently trading above both its 50-week and 200-week SMA, which implies that the bulls are currently in control.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level of BCRX is if the stock corrects back to the breakout level of ascending triangle pattern. This translates to a price of around $8.15.
TP: Our target prices are $12 and $17 in the next 4 to 6 months.
SL: To limit risk, place a stop loss around $7.50. Note that this stop loss is on a closing basis.
Our target potential upside is 47% to 109% in the next 3-5 months. For a risk of $0.65, the target rewards are $3.85 and $8.85. This is a nearly 1:6 and 1:14 risk-reward trade.
In other words, this trade offers nearly 6X to 14X 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 breakout level. 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.