Technical Analysis: These Indications Justify Higher Dynavax Stock Prices

dynavax stock analysis
iStock.com/denphumi

DVAX Stock: Primed for Higher Prices

Trade wars have spooked the markets, and rightfully so. Nothing ever good has come out of a trade war, and as investors try to come to grips with these ever-evolving political events, the markets are gyrating in violent fashion. These violent swings are unsettling, and they cause emotions to run high.

In times of duress, it’s imperative to keep a cool head because emotions have rarely led to any good investment decisions. I have turned things down a notch, but I am still cautiously optimistic and therefore continue to look for investments that are likely to appreciate.

I am focusing on Dynavax Technologies Corporation (NASDAQ:DVAX) stock because a number of technical indications have come to together to suggest that Dynavax stock is primed to make a move toward higher DVAX stock prices.

This first indication is a completed technical price pattern, which is highlighted on the following Dynavax stock chart.

Chart courtesy of StockCharts.com

The technical price pattern highlighted on the DVAX stock chart is a symmetrical triangle.

Symmetrical triangle patterns are created when the price action is characterized by a sequence of lower highs and higher lows. Identifying these pattern is accomplished by connecting the respective levels of lower highs and higher lows, which creates two converging trend lines. These trend lines not only identify the pattern, but they outline respective levels of price support and price resistance.

I am very fond of triangle patterns because they have powerful breakouts. The power generated from this pattern is a direct result of traders positioning themselves on either side of support and resistance in anticipation of a breakout. When either support or resistance is broken, their orders are either filled or closed out, and this propels the move that follows.

On March 21, Dynavax stock broke above resistance, completing the symmetrical triangle and suggesting that higher DVAX stock prices are now on the horizon.

This move could not have come at a better time, because higher prices are needed in order to avert generating a bearish signal.

This potential signal I am referring to is highlighted on the following Dynavax stock chart.

Chart courtesy of StockCharts.com

This DVAX stock chart highlights two simple moving averages: the 50-day moving average, which is highlighted in blue, and the 200-day moving average, which is highlighted in red.

The crossing of these moving averages creates either a bullish signal suggesting that a bull market is in development or a bearish signal suggesting that a bear market is in development.

A bullish signal is called a golden cross and it is created when the 50-day moving average crosses above the 200-day moving average.

A bearish signal is called a death cross and it is created when the 50-day moving average crosses below the 200-day moving average.

While the symmetrical triangle was in development, these moving averages were on the verge of generating a death cross. This bearish signal was averted after DVAX stock smartly appreciated.

An averted signal is a powerful indication and it should never be dismissed because it takes a lot of strength to avert a bearish signal. The averted death cross is implying that the path of least resistance is geared toward higher prices, and when you take this notion into context with the company’s longer-term trend, quite a bullish picture emerges.

The longer-term trend is highlighted on the following Dynavax stock chart.

Chart courtesy of StockCharts.com

This DVAX stock chart illustrates that the longer-term bullish trend has been constructive in nature, and its advance has been supported by a very influential momentum indicator.

Constructive price action contains two predominant waves: an impulse wave and a consolidation wave, which are responsible for creating and sustaining a trend.

The wave highlighted in green is an impulse wave and it defines the period in a bullish trend when the stock sustains an uninterrupted move toward higher prices.

The wave highlighted in purple is a consolidation wave and it defines the period in a bullish trend when the stock corrects and refrains from advancing. Consolidation waves are a very important part of a bullish trend because they create the necessary environment where an advancing impulse wave can follow.

The completed symmetrical triangle doubles as a consolidation wave, and its completion is suggesting that an impulse wave is likely in development.

This notion that an impulse wave is in development will be confirmed when a bullish MACD cross is generated.

MACD is a momentum indicator that distinguishes between bullish and bearish momentum. This indicator is very influential because a stock cannot sustain a move in either direction unless the applicable momentum supports it, which is why the wave structure coincided nicely with this indicator.

In September 2017, a bullish MACD cross was generated, which coincided with the development of an impulse wave. In November 2017, a bearish MACD cross was generated, and it coincided with the development of a consolidation wave.

If this pattern is to persist, then a bullish MACD cross will be generated to coincide with the current impulse wave. This scenario is very likely because the MACD signal lines are currently converging and a bullish MACD cross could be generated in the days ahead, reinforcing the notion that higher Dynavax stock prices are on the horizon.

Analyst Take

I am bullish on Dynavaz stock because a number of technical indications are suggesting that DVAX stock is currently geared for higher prices. Because my bullish view was created using technical indications, I will maintain this view until there indications suggesting that such a view is no longer warranted.