Array Biopharma Stock Is Ripe for an Epic Move Toward Higher Prices

Array BioPharma Stock
iStock.com/Credit:marchmeena29

Multiple Indications Support Notion of Higher ARRY Stock Prices

The market has been inundated with selling pressure and it’s affecting all sectors across the board. I did a scan in this current market environment to see which stocks were showing signs of inherent strength, and the list was quite small. The majority of the names were inverse ETFs that go up in value when the market goes down.

There was one name in Array Biopharma Inc (NASDAQ:ARRY) that stuck out in particular; it was making a new high. After some digging, I was very intrigued by my findings. Finding a stock making a new high in this market environment, which is inundated with selling pressure, is a bullish feat on its own and a sign of real bullish inherent strength.

Aside from just moving higher on the day, there are a number of technical indications on the Array Biopharma stock chart that are constructive in nature. They are suggesting that further gains in ARRY stock are on the horizon. I will highlight these technical indications and outline their implications below.

The following stock chart illustrates a completed technical prices pattern, which is currently supporting the notion of higher ARRY stock prices.

Array Stock Chart

Chart courtesy of StockCharts.com

The pattern highlighted on the ARRY stock chart is a cup and handle pattern and it is characterized by its two distinct troughs, where the first is much larger than the second. These troughs create a picture that resembles a teacup, hence the name.

This cup and handle price pattern was created because a significant level of resistance prevented the stock price from advancing beyond it.

It took 11 months to establish and create this pattern, and in January 2018, resistance was finally broken, completing the cup and handle pattern. The completed pattern was implying that higher stock prices were likely to follow, and that is exactly what has transpired.

This cup and handle pattern is actually an instrumental part of the wave structure responsible for creating and sustaining a trend. This wave structure is highlighted on the following Array Biopharma stock chart.

Array Biopharma Inc Chart

Chart courtesy of StockCharts.com

This stock chart has been annotated in order to highlight the wave structure currently supporting the bullish trend in development.

This wave structure consists of impulse waves and consolidation waves.

The waves highlighted in green are the impulse waves and they define the stage in a bullish trend where a stock makes a sustained move toward higher prices. This wave, which is advancing in nature, is what traders aim to capture in a trading strategy.

The waves highlighted in purple are the consolidation waves and they define the stage in a bullish trend where the stock price corrects and refrains from staging an advance. The corrective nature of this wave unwinds any overbought conditions that were created during the wave that preceded it, in order to set the stage so another impulse wave can follow. Consolidation waves are very important in sustaining the health of a trend, but due to their corrective price action, traders try to avoid this wave when possible.

The cup and handle price pattern doubles as a consolidation wave within this wave structure. Its completion suggested that a new impulse wave is currently in development. The moving average convergence/divergence (MACD) indicator is instrumental in correctly implying and confirming which wave is in development.

MACD is a trend-following momentum indicator that uses the crossing of a signal line to distinguish between bullish and bearish momentum. Deciphering momentum is very significant and influential because a sustained move in either direction cannot occur without the applicable momentum. This is why the waves within the wave structure coincide with the signals generated by this indicator.

Every bullish MACD cross highlighted on the stock chart has coincided with an impulse wave and every bearish cross has coincided with a consolidation wave. The MACD indicator is currently in bullish alignment, which supports the notion that higher Array Biopharma stock prices, via an impulse wave, are currently in development.

If these indications were not enough to imply that a move toward higher ARRY stock prices is in development, the next stock chart was instrumental in solidifying this belief.

ARRY Stock Price Chart

Chart courtesy of StockCharts.com

This stock chart illustrates that Array Biopharma stock is currently forging a new all-time high.

The stock price has currently breached a long-standing high that was established 16 years ago in December 2001. This feat suggests that much higher stock prices can develop because there is no overhead resistance to contain the stock price from advancing.

Many great moves toward higher prices have been fueled with this exact characteristic and this is because it creates a dynamic where buying pressure overwhelms supply; anyone holding a bearish position is inclined to cover their positions while momentum investors are simultaneously chasing performance. This creates an imbalance between demand and supply for the stock. Therefore, Array Biopharma stock is ripe for a relentless move toward higher prices. I can’t say for sure that such a development will occur, but the environment is perfectly aligned for such an outcome.

Analyst Take

Array Biopharma stock is shrugging off market weakness and staging an advance. This and many other technical indications are suggesting that higher stock prices are likely, which is why I am currently bullish on the prospects of ARRY stock going forward.