Celgene Corporation: CELG Stock Charts Are a Must-See

CELG StockCELG Stock: On the Fence

There comes a time when a stock will sit on a prevailing trend line. It is at this point where the stock can bounce off this line, or it can fall through this line, causing a major trend reversal. Nothing is forever, but trends can continue longer than most people can fathom. With this in mind, both scenarios have an equal chance of playing out when such an instance occurs. Celgene Corporation (NASDAQ:CELG) stock is sitting in this exact precarious position as I write.

It is for this reason that I do not rely on any one indicator to set my trading bias. I need multiple indicators to confirm my premise. This is my way of creating my own edge. No system is perfect, so it is always wise to mark an exit point if the trade goes against me.

The following Celgene stock chart illustrates the fence I was referring to.


Chart courtesy of StockCharts.com

The uptrend that is present on the chart above is certainly intriguing. This trend has spanned 14 years and shows no signs of abating. It is a perfect example of a bullish trend as the price moves from the lower left to the upper right. The run in Celgene stock has been incredible, and a lucky few have capitalized on it.

As I have mentioned in the past, the beauty of such a trend is that it serves many purposes. If I am looking to buy CELG stock on a decline, I can set “buy” orders on the trend as it acts as support. If I am looking to protect profits, I would set stops just below the trend line. As long as this trend line remains intact, the trend remains to the upside.

The following chart illustrates the current pattern that has developed on this trend line.


Chart courtesy of StockCharts.com

Celgene stock has spent approximately one year  producing a descending triangle. In general, these triangles are seen in a bearish light based on the trading action.  Each and every time CELG stock approaches support at $94.00, buyers appear to support the price. Each subsequent rally ends at a lower high as sellers are more willing to exit positions at a lower price. On average, these patterns break down, but that is not always the case. Descending triangle patterns often have five points of contact before the pattern breaks in either an upward or downward direction.

CELG stock completed these five points of contact and broke out to the upside, negating the bearish connotation associated with such patterns. The first price objective of such a pattern is the highest point at which the triangle began, thus the target based on this rule of thumb is $140.00.

The Celgene stock chart below illustrates other positive developments that support a bullish bias.


Chart courtesy of StockCharts.com

In August, CELG stock generated a golden cross. A golden cross is a bullish signal that is produced when a faster 50-day moving average (highlighted in blue) crosses above a slower 200-day moving average (highlighted in red). Traders use this signal to confirm that a bull market is on the horizon. From my experiences, I have found it always wise to trade in the direction of this indicator.

On the lower panel of the chart, there is an indicator labeled “MACD.” Moving average convergence divergence (MACD) is a simple and effective trend-following momentum indicator. Signal line crossings are used to distinguish between bullish and bearish signals. This indicator is similar to the golden cross, but this indicator uses exponential moving averages on a shorter timescale. This indicator is more timely with regard to the short-term swings in price.

The takeaway from these indicators is that the longer-term momentum has swung to bullish, but this happened as the price of CELG stock began to decline. The shorter-term MACD indicator suggests that the share price is ready to rise and reaffirms the bullish premise.

The Bottom Line on Celgene Stock

I am currently bullish on CELG stock and the price needs to rise for that bias to remain intact. If Celgene stock dropped below $94.00, that would effectively break both the triangle and the trend line to the downside. My bias would take a 180° spin to bearish if such a condition were to develop.