CASI Stock: A Bullish Trend in Development
The markets continue to swing wildly in both directions as volatility remains elevated. This frenetic price action is a result of the markets trying to come to grips with a number of market-moving events, ranging from the prospects of higher interest rates to the repercussions of a trade war.
Currently, the market indices are testing very important levels of price support. As long as they maintain a foothold above support, I will have the inclination to believe that a bull market in stocks is still in development, and I will therefore continue to look for investments that are geared toward higher stock prices.
I am focusing on CASI Pharmaceuticals Inc (NASDAQ:CASI) stock because a technical price pattern on the CASI Pharmaceutics stock chart was recently completed, suggesting that CASI stock is now geared for higher prices.
The completed technical price pattern is highlighted on the following CASI Pharmaceuticals stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the CASI stock chart is a symmetrical triangle.
A symmetrical triangle is created when the price action is characterized by a sequence of lower highs and higher lows.
In order to help define this pattern, two converging trend lines were created by connecting the sequence of lower highs and the sequence of higher lows. The upper trend line represents a level of price resistance, while the lower trend line represents a level of price support.
These trend lines are important because the completion of this technical price pattern is dependent on whether the stock price can break above price resistance or break below price support. Once this feat is accomplished, the stock price is expected to continue in that direction.
Let me clarify; not just continue in that direction, but accelerate in that direction. The reason why price acceleration can be expected is that triangle patterns are very special patterns known for their powerful breakouts. The reason why these patterns are so special is that the contraction of space between price support and price resistance that is created as the pattern develops causes energy to be stored within the pattern. 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 2, 2018, CASI stock exited the triangle pattern by closing above the trend line that represented price resistance. This event is highlighted as a breakout on the CASI Pharmaceuticals stock chart, and true to its nature, CASI stock exploded to the upside the following day, tacking on 47.54%.
This completed symmetrical triangle is implying that further gains can be expected because it is actually a part of a bigger bullish trend that began in September 2017.
The wave structure responsible for creating this bullish trend is highlighted on the following CASI Pharmaceuticals stock chart.
Chart courtesy of StockCharts.com
This CASI stock chart illustrates a wave structure consisting of impulse waves and consolidation waves, which are responsible for creating and sustaining a bullish trend.
The impulse waves, which are highlighted in green, are advancing in nature, and they capture the period in a bullish trend where a stock makes a sustained move toward higher prices.
The consolidation wave, which is highlighted in purple, is corrective in nature, and it captures the period in a bullish trend where a stock corrects and refrains from advancing. Corrective price action is a necessary part of every bullish trend because it creates the necessary conditions conducive to the development of an impulse wave.
The completed symmetrical triangle represents a consolidation wave, and its completion implies that an impulse wave is currently in development. Therefore, higher CASI stock prices are on the horizon.
This notion of higher CASI Pharmaceuticals stock prices is being reinforced by the moving average convergence/divergence (MACD) indicator.
MACD is a trend-following indicator that determines whether bullish or bearish momentum is influencing the price action in a stock. Bullish momentum suggests that a stock is geared toward higher prices, while bearish momentum suggests that an investment is geared toward lower prices. This is pertinent information because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.
In September 2017, a bullish MACD cross was generated and it correctly implied that higher prices, via an impulse wave, were in development.
Currently, the completion of the consolidation wave has coincided with a bullish MACD cross. These signals reinforce the notion that higher CASI Pharmaceuticals stock prices are currently in development.
I am bullish on CASI Pharmaceuticals stock because the price action, coupled with an influential momentum indicator, is suggesting that higher CASI stock prices are currently in development. I will maintain this view until new indications are generated, suggesting that this view is no longer warranted.