The biotechnology company focused on developing and commercializing innovative, empowered monoclonal antibody-based therapies for the treatment of cancer, Seattle Genetics, Inc. (NASDAQ: SGEN) seems to be ready for a price surge according to its latest charts.
#1 Descending Triangle Pattern Breakout: The stock’s daily chart shows that it has recently broken out of a descending triangle pattern in an upward direction. This descending triangle pattern is marked in purple color on the daily chart. An upward breakout from a bearish pattern like descending triangle is typically a good bullish sign.
#2 Bullish Stochastic: The stochastic shows that the %K line is above the %D line and is moving up from oversold levels. This indicates an overall bullishness.
This shows that the bulls are currently in control.
#4 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.
#5 Cup and Handle pattern: The weekly chart of SGEN shows that the stock is forming a cup and handle pattern.
This is marked in the chart in pink color. A cup and handle pattern is a consolidation and breakout pattern and a breakout from it indicates that the stock may move higher in the short term.
#6 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the weekly chart as well. This is a possible bullish indication.
#7 Bullish RSI: The RSI is currently above 50 and moving up in the weekly chart, indicating possible bullishness.
#8 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines in the weekly chart. The +DI line is also currently above –DI line. This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for SGEN is either of the two levels.
- Above the resistance level of $80.
- Near the support level of $70.
TP: Our target prices are $80 and $90 (for entry near $70) and $90 and $100 (for entry near $80) in the next 3-6 months.
SL: To limit risk, place a stop loss at $65.80 (for entry near $70) and $73.80 (for entry near $80). Note that the stop loss is on a closing basis.
Our target potential upside is almost 13% to 28% in the next 3-6 months.
- Entry near $70: For a risk of $4.20, our target rewards are $10.00 and $20.00. This is a 1:2 and 1:5 risk-reward trade.
- Entry near $80: For a risk of $6.20, our target rewards are $10.00 and $20.00. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the breakout level of the descending 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.
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