Don't Ignore This Chart!

Celgene Stalls within Trend - What's Next?


Celgene (CELG) has not made much headway the last twelve months, but the overall trend is up and the current consolidation looks like a bullish continuation pattern. Taking a step back, notice that CELG doubled from the April 2014 low to the July 2015 high (~70 to ~140). The stock then retraced around 61.18% of this advance with a 30+ percent decline into January 2016. Even though a 30+ percent decline seems long-term bearish, the retracement amount is actually normal for a pullback within an uptrend. Signs of a long-term uptrend are emerging as the stock bounced off the 95-100 area four times from January to October, and forged higher highs in August and November. 

The stock is currently stuck in a consolidation that looks like a bullish continuation pattern. After surging above 125 in November, the stock stalled the last three months with a triangle-wedge formation. These are typically continuation patterns that represent a rest after a big move. Their directional bias is based on the prior move and that move was up. A break above the January high would signal an end to this corrective period and a resumption of the uptrend. Chartists can also watch the Aroon indicators for a signal. Notice that both Aroons are parallel and falling the last two months. The first one to turn up and break above 50 would provide a directional signal for Celgene. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus