FOLD Stock: This Characteristic Is Shared Among a Very Few High-Profile Stocks
The markets are all about perspective; some investors are always bearish while others are always bullish. Some are short-sighted and prefer to trade, while others like to play the long game, utilizing a buy-and-hold strategy. In the proper contexts, all of these positions can be very effective.
My views are never static, and they change with the market. This is because I generate my views by interpreting price action and technical indicators.
For instance, after the market indices sold off in late January, I outlined where price support was located—with the stipulation that, as long as the indices remained above these levels, the sell-off was nothing more than a much-needed correction in a bullish trend.
If those levels of price support failed to hold, I would have to change my tune.
Those levels of support were tested numerous times and, with great valor, they have held. I believe that when the Russell 2000 index forged a new all-time high on May 16, this event vindicated my bullish view.
The Russell 2000 is the small-cap stock index. If this group of stocks is pushing higher, it bodes extremely well for the market’s prospects.
The reason why I am going into so much depth regarding perspective is that I have stumbled upon a stock about which, upon first glance, I didn’t find anything out of the ordinary. It was not until I changed my perspective that the entire picture changed and my interest was piqued.
The company in question is Amicus Therapeutics, Inc. (NASDAQ:FOLD), and the perspective I speak of is located on the 12-year FOLD stock chart. There is a very large technical price pattern that has been created over this time frame, and its implications are directly correlated with the size of the pattern.
This technical price pattern is highlighted on the following Amicus Therapeutics stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the above FOLD stock chart is a cup and handle pattern.
A cup and handle price pattern is created when a significant level of price resistance prevents the stock price from advancing beyond it. In this case, the level of price resistance currently resides at $18.00. That level was established a few short months after Amicus Therapeutics stock began trading on a public exchange.
This inability to move beyond a significant level of price resistance, and the process of testing it from beneath, has created two very large and distinct troughs. The first trough is much larger than the second. These troughs create a picture that depicts a teacup, creating the cup and handle price pattern.
In order to complete the pattern, FOLD stock needs a sustained close above $18.00. A completed cup and handle pattern would imply that higher stock prices are likely to follow. That’s for the simple reason that the stock price is free to appreciate because the level of price resistance that contained the stock price has finally been broken.
The repercussions of this pattern are directly related to its size. From a linear perspective, a break above $18.00 would suggest that $34.00 is a viable price objective for Amicus Therapeutics stock. If you’re wondering, this objective was obtained by taking the depth of the pattern and extrapolating that value above the significant level of price resistance.
Here’s the thing: this is no ordinary cup and handle price pattern. The significant level of price resistance responsible for creating the pattern is also the long-standing all-time high that was created shortly after FOLD stock began trading on a public exchange.
This is a very rare characteristic shared among very a few high-profile stocks, and the move that followed the break above the long-standing high is what makes these stocks so high-profile.
Facebook, Inc. (NASDAQ:FB) and Shopify Inc (NYSE:SHOP) are prime examples of stocks that have shared this characteristic. Once that long-standing all-time high was broken, there was really nothing to contain the stock price from advancing, which is why an epic move toward higher prices soon followed.
Once FOLD stock breaks above $18.00, I expect a similar outcome.
I believe that, once Amicus Therapeutics stock breaks above $18.00, it will quickly reach its preliminary price objective of $34.00, and then higher prices will follow.
For the simple reason that there won’t be any overhead resistance to contain the FOLD stock price from advancing, the sky will truly be the limit.