ATRA Stock: A Powerful Technical Price Pattern Was Just Completed
Those elevated levels of volatility that were responsible for causing the turbulent market conditions in the first quarter have subsided. These turbulent market conditions caused the indices to sell off, but thankfully, the significant levels of price support that needed to hold have held.
Add in the fact that the Russell 2000 index, which is the small-cap index, has just gone on to create a new all-time high, and I have the perfect combination of indications to suggest that the markets are primed for a move toward higher prices.
This is great news for me because my bullish view, which I maintained during the first quarter, suggesting that the transpiring sell-off was nothing more than just a much-needed correction, has likely been vindicated.
Playing on the notion that indices are likely to appreciate, I am currently focusing on Atara Biotherapeutics Inc (NASDAQ:ATRA) stock because I believe Atara Biotherapeutics stock is primed to move higher alongside the markets.
These beliefs are centered around a technical price pattern that was completed on May 14, 2018, suggesting that ATRA stock is likely to appreciate.
This technical price pattern is highlighted on the following Atara Biotherapeutics stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the ATRA stock chart is a symmetrical triangle pattern. Symmetrical triangles are created when the price action is characterized by a progressive sequence of lower highs and higher lows.
Capturing this pattern was accomplished by using two trend lines that were created by connecting the peaks and troughs that resulted from the sequence of higher lows and lower highs. These trend lines act as levels of price support and price resistance, and this price pattern is completed only when one of these trend lines is broken.
The converging nature of these two trend lines is why triangle patterns are particularly powerful. This convergence of space between support and resistance causes energy to build within the pattern as it develops. This energy is a result of traders positioning themselves on either side of support and resistance in anticipation of a resolution to this pattern.
On April 11, 2018, Atara Biotherapeutics stock broke out of the symmetrical triangle, and a powerful move toward higher prices followed. In the five days following the breakout, ATRA stock appreciated to the tune of 22.92%, before the stock finally took a breather. This is a testament to the power generated by the symmetrical triangle pattern.
I have reason to believe that this surge in price is only the beginning of a much larger move toward higher prices. This belief is based on the notion that the symmetrical triangle is an integral part of a wave structure that is responsible for creating and sustaining a bullish trend.
This wave structure is highlighted on the following Atara Biotherapeutics stock chart.
Chart courtesy of StockCharts.com
This ATRA stock chart illustrates the wave structure responsible for creating and sustaining the bullish trend.
This wave structure consists of impulse waves and consolidation waves.
The waves highlighted in green are impulse waves, and they capture the stage in a bullish trend when a stock price makes a sustained move toward higher prices.
The wave highlighted in purple is a consolidation wave, and it captures the stage in a bullish trend when a stock corrects and refrains from advancing. This corrective price action is an integral part of every bullish trend because it creates the necessary conditions so a new advancing impulse wave can follow.
The symmetrical triangle doubles as a consolidation wave, and its completion is suggesting that an impulse wave is now in development.
The great thing about this wave structure is that it not only implies that higher Atara Biotherapeutics stock prices are on the horizon, but it can also be used to quantify the potential upside.
The theory behind this wave structure is that the impulse wave currently in development should mirror the magnitude of the impulse wave that preceded the consolidation wave. Applying this theory in practice suggests that $71.45 is a currently viable price objective for ATRA stock.
A completed technical price pattern on the Atara Biotherapeutics stock chart has initiated a move toward higher prices. I believe this move has much further to run, where ATRA stock is likely to reach $71.45 in the not-too-distant future.