The American multinational biopharmaceutical company, Amgen, Inc. (NASDAQ: AMGN) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending triangle pattern breakout: The daily chart of AMGN shows that the stock has currently broken out of an Ascending Triangle pattern with high volume. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend. The breakout level also acts as a good support level.
Daily Chart – AMGN
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently gaining control.
#4 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 and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started to rise from below both (+DI) and (-DI).
#6 Uptrend Unbroken: The weekly chart shows that the stock’s uptrend is currently unbroken, as it has been forming higher highs and higher lows. The uptrend line has been marked in a green color line in the weekly chart. This is a possible bullish indication.
Weekly Chart – AMGN
#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 bullish.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for AMGN is if the stock corrects to the breakout level of the ascending triangle pattern, at around $243.
However, for those with a higher risk appetite, you can purchase half the intended quantity of shares of AMGN if it trades above yesterday’s high, translating to a price of around $256.50.
TP: Our target prices are $265 and $280 in the next 3-6 months.
SL: To limit risk, place a stop loss at $228 (for entry near $243) and $242.00 (for entry near $256.50). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 9% to 15% in the next 4-6 months.
- Entry near $243: For a risk of $15.00, the target rewards are $22.00 and $37.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $256.50: For a risk of $14.50, the target reward (TP#2) is $23.50. This is a nearly 1:2 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 with high volume from the ascending 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 its sector.
Happy Trading!
— Tara
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