The American molecular diagnostic company based in Salt Lake City, Utah, Myriad Genetics, Inc. (NASDAQ: MYGN) seems to be getting ready for a price bump after a slight correction according to the charts.
Bullish Move – Chart Indications
#1 Channel Breakout: As you can see from the daily chart of MYGN, the stock is trading within an uptrend channel for the past several weeks. MYGN has typically taken support at the lower end of the channel before bouncing back. The stock has currently broken out of the channel with very high volume. This is a bullish sign.
Daily Chart – MYGN
#2 Strong RSI: Presently, the RSI reading is above 50 and moving up. This indicates the strength of the current upmove.
The stock is also trading above both 50-day SMA as well as 200-day SMA. All these indicate good supports for the stock.
#4 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 as a potential buy signal.
#5 Strong Stoch: The stochastic is currently moving up from oversold levels. The %K line is also above the %D line. This is a bullish sign.
#6 Uptrend unbroken: The weekly chart shows that the stock’s uptrend is still unbroken as the price has been making higher highs and higher lows. The price is also above both 50-week and 200-week SMA. This shows that the bulls are currently in control.
Weekly Chart – MYGN
#7 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 bullishness.
#8 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) which is typically considered as a bullish signal.
#9 Consolidation and breakout: The stock had crossed above a resistance level of $40 and has been consolidating between $40 and $45 for a while. This area is marked as a pink rectangle. The stock has now broken out of this consolidation area and is moving up. This is a bullish sign.
#10 Strong RSI: Presently, the RSI reading is above 50 and moving up. This indicates the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level of MYGN is near the channel breakout level at around $45.
For those with a higher risk appetite, you can purchase half the intended quantity of shares at the current price of $48.20.
TP: Our target prices are $57 and $65 in the next 3-6 months.
SL: To limit risk, place a stop loss below $41.70. Note that the stop loss is on a closing basis.
Our target potential upside is nearly 18%-35% in the next 3-6 months.
- Entry at $45: For a risk of $3.30, our target rewards are $12 and $20. This is a 1:4 and 1:6 risk-reward trade.
- Entry at $48.20: For a risk of $6.50, our target reward (TP#2) is $16.80. This is a 1:3 risk-reward trade.
In other words, this trade offers almost 3x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the current channel 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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