The biopharmaceutical company focused on the discovery, development and commercialization of RNA interference therapeutics for genetically defined diseases, Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern Breakout: The daily chart of ALNY 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.
Daily Chart – ALNY
#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.
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#5 Bullish ADX: The ADX line is starting to move up from below –DI and +DI lines while the +DI line is currently above –DI line. This indicates possible bullishness.
#6 Double Bottom Breakout: The weekly chart shows that the stock has recently broken out from a double bottom pattern. This is marked in orange color in the chart. A double bottom is a bullish pattern and a breakout from it indicates that the stock may move higher in the near-term.
Weekly Chart – ALNY
#7 Bullish ADX: In the weekly chart as well, the ADX line is starting to move up from below –DI and +DI lines while the +DI line is currently above –DI line. This indicates 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.
#9 Fibonacci Support: Usually, after an up-move, stocks typically retrace to any of the key Fibonacci levels before surging back again. ALLY had taken support at the 23.6% Fibonacci support level as seen in the weekly chart. So, this seems like a strong support area for the stock. Currently, the stock has crossed above the 61.8% Fibonacci level, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level of ALNY is if the stock corrects to near the breakout level of the ascending triangle pattern, to a price of around $100.
For immediate entry, you can purchase half the intended quantity of the shares if the stock trades above yesterday’s close, which translates to a price above $108.25.
TP: Our target prices are $120 and $140 in the next 3 to 5 months.
SL: To limit risk, place a stop loss around $97.30 (for entry near $100) and $102.40 (for entry near $108.25). Note that this stop loss is on a closing basis.
Our target potential upside is 10% to 75% in the next 3-5 months.
- Entry at $100: For a risk of $2.70, the target rewards are $20.00 and $40.00. This is a nearly 1:7 and 1:15 risk-reward trade.
- Entry at $108.25: For a risk of $5.85, the target rewards are $11.75 and $31.75. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers nearly 2x to 15x 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.
Happy Trading!
Tara
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