The company that develops treatments to protect children with food allergies (peanut, milk, and egg) from the consequences of accidental exposure, Aimmune Therapeutics Inc. (NASDAQ: AIMT) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Falling Wedge Breakout: The daily chart of AIMT shows that the stock was trading within a falling wedge pattern during the past few months. This pattern is marked in the daily chart in pink color. The stock has currently broken out from it. Once the stock moves breaks out from a bullish pattern like the Falling Wedge Pattern, it has the potential to move further up.
Daily Chart – AIMT
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
This usually implies a possible bullish bias for the stock.
#4 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart.
This is a possible bullish indication.
#5 Near support level: The stock is currently trading near a strong support level, which is marked as a green dotted line.
This seems like a good area for the stock to bounce higher.
#6 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. AIMT has taken support at the 23.6% Fibonacci support level of the upmove, as seen in the weekly chart. This is a possible bullish sign.
Weekly Chart – AIMT
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible 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). This is also a possible bullish sign.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of AIMT at the current price of $21.15.
TP: Our target prices are $30 and $40 in the next 4 to 6 months.
SL: To limit risk, place a stop loss below $17.70. Note that this stop loss is on a closing basis.
Our target potential upside is almost 42% to 89% in the next 4-6 months.
For a risk of $3.45, our first target reward is $8.85 and the second target reward is $18.85. This is a nearly 1:3 and 1:6 risk-reward trade.
Overall, this trade offers nearly 3x to 6x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the falling wedge 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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