Celgene Stock Is Setting Up for an Upside Breakout

Celgene StockCELG Stock: Bullish on All Fronts

I have had my eye on Celgene Corporation (NASDAQ:CELG) stock and the price action on the CELG stock chart continues to suggest that something is brewing. The Celgene stock price action has been bullish and I have to assume that the flavor of this brew is filled with hints of higher prices.

The basis of my views are centered around technical analysis, which is the method I use to analyze investments. Technical analysis is based on the notion that historical price and volume data can be used to discern trends and forecast future prices.

I have been grooming my skill set in price chart analysis for close to two decades, and the prospects going forward for Celgene stock are compelling because the price action on multiple time frames continues to suggest that higher prices are a likely outcome.

The following stock chart illustrates the long-term trend in Celgene stock.


Chart courtesy of StockCharts.com

The long-term trend in CELG stock has been supported by a simple and effective uptrend line, a trend line that is created by connecting the valleys on the stock chart. This trend has defined the bull market in CELG stock since 2002, and as long as Celgene stock is trading above it, I can only assume that higher prices are set to prevail.

The moving average convergence/divergence (MACD) indicator in the lower panel is converging and a bullish cross can generate shortly. MACD is a simple and effective trend-following momentum indicator. Signal-line crossings are used to distinguish between the dominance of bullish and bearish momentum. A bullish cross would suggest that bullish momentum has overwhelmed any bearish momentum and that the path of least resistance is higher. I would not be surprised to see Celgene stock accelerate higher after this signal is generated.

The following Celgene stock chart illustrates the bullish price action that is occurring above the long-term trend.


Chart courtesy of StockCharts.com

For much of 2016, and now 2017, Celgene stock has been hovering above the long-term trend line. This hovering, as I described it, has not been a complete waste of time because the price action has been very constructive, and it is why I believe something bullish is brewing in CELG stock.

Constructive price action consists of an impulse wave that advances price, and a consolidation wave that alleviates any overbought conditions and sets up the next impulse wave.

The advance off the lows in April 2014, highlighted in green, constitute the impulse wave, and the corrective action highlighted in purple constitutes the consolidation wave.

The consolidation wave that developed is a very special pattern because of its triangular shape. Triangle consolidation patterns are created using two converging trend lines, and these converging trend lines are responsible for the explosive breakout that this pattern is known for. In July 2016, CELG stock broke out of this consolidation triangle, and quickly backtested it from above in order to confirm that the breakout was legitimate.

The successful completion of a consolidation triangle suggests that a new impulse wave is now in development, and the quick rebound off the backtest supports this notion.

The following Celgene stock chart illustrates the price action that followed the successful backtest of the consolidation pattern.


Chart courtesy of StockCharts.com

The surge in CELG stock price that followed the successful backtest of the consolidation pattern contains similar constructive price action.

The current consolidation wave that developed after an impulse wave was done advancing the price of Celgene stock is nearing completion and price will exit the pattern, dictating the next direction in price. The confluence of indicators suggests that an upside breakout price will continue to push CELG stock higher.

Bottom Line on Celgene Stock

Multiple time frames support the notion that higher Celgene prices are likely, and support holding a bullish view. The bullish price action combined with bullish indicators suggest that CELG stock is setting up for a quick move to the upside.