The biotechnology company that develops gene therapies for severe genetic disorders and cancer, Bluebird Bio Inc. (NASDAQ: BLUE) seems to be poised for a price surge as per its latest charts.
Bullish Indications
#1 Channel Breakout: As you can see from the daily chart, the stock was trading within a downtrend channel during the past few months. This is marked in the daily chart in purple color lines. Currently, the stock has broken out of the channel. Once a stock breaks out from a channel, it has the potential to move further up.
Daily Chart – BLUE
#2 Price above MA: The price is currently above the short-term moving average of 50-day SMA, indicating that the bulls are still in control. This is a positive indication.
#4 Bullish ADX: The ADX line has started to move up from below –DI and +DI lines.
The +DI and ADX lines are also currently above –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Bounceback From Support Level: As seen in the weekly chart, the stock had taken support near a long-term support area and is currently moving higher. This is a possible bullish sign. The support level is marked as an orange color dotted line.
Weekly Chart – BLUE
#7 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 bias.
#8 Bullish RSI: In the weekly chart, the RSI is currently moving higher from oversold levels. This indicates possible bullishness.
#9 Bullish Stoch: The weekly chart also shows that the %K line of the stochastic is above the %D line. The stoch is also moving higher from oversold levels. All these are possible bullish signs.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of BLUE above yesterday’s high. This translates to a price of around $65.50.
TP: Our target prices are $72 and $80 in the next 4-6 months.
SL: To limit risk, place stop-loss at $61.10. Note that the stop-loss is on a closing basis.
Our target potential upside is 10% to 22% in the next 4 to 6 months.
For a risk of $4.40, our target rewards are $6.50 and $14.50. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend channel breakout level with a 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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