FGEN Stock: Anticipating Much Higher Stock Prices
We are almost halfway through 2018. The first part of the year is one I think many would like to forget because the investment environment was subpar, to say the least. I am looking forward to the second half of 2018 because I have good reason to believe that it is going to be much better than the first.
For one, the elevated levels of volatility that plagued the first part of 2018 have subsided. Secondly, both the Russell 2000 small-cap index and the Nasdaq Composite have made new all-time highs. These new highs are suggesting that the weakness that gripped the markets in the first part of the year was just a much-needed correction and that the markets are now poised for further gains.
I am focusing on FibroGen Inc (NASDAQ:FGEN) stock because I have reason to believe that FibroGen stock will be a beneficiary of this broad-based move toward higher index values.
These beliefs are based on a number of technical indications that are currently suggesting that FGEN stock is not only primed for higher stock prices, but that the move that follows may be epic in proportions.
This first set of indications suggesting that FGEN stock is primed for higher stock prices is highlighted on the following FibroGen stock chart.
Chart courtesy of StockCharts.com
This FGEN stock chart highlights a wave structure and an influential momentum indicator that have been responsible for supporting a bullish move toward higher FibroGen stock prices.
This wave structure consists of impulses waves and consolidation waves.
The impulse waves, which are highlighted in green, define the period in a bullish trend when a stock makes a sustained advance toward higher prices.
The consolidation waves, which are highlighted in purple, define the period in a bullish trend when a stock corrects and refrains from advancing.
Impulse waves lead and consolidation waves follow. Once the consolidation wave has run its course, another impulse wave is expected to follow. These waves feed off each other, creating the foundation that sustains a trend.
These waves have meticulously coincided with the signals generated by the moving average convergence/divergence (MACD) indicator.
MACD is an influential momentum indicator that uses the crossing of a signal line to distinguish whether bullish or bearish momentum is driving the price action in a stock. Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
A stock cannot sustain a move in either direction unless the applicable level of momentum is supporting the move. This is why it is not a mere coincidence that impulse waves have coincided with a bullish MACD cross, while consolidation waves have coincided with a bearish MACD cross.
For instance, in July 2016, a bullish MACD cross was generated and a substantial move toward higher FibroGen stock prices, via an impulse wave, followed.
In November 2017, a bearish MACD cross was generated and FGEN stock ended its ascent toward higher prices. A consolidation wave has been in development ever since.
A bullish MACD cross was just generated in the first week of June, and it is implying that the consolidation wave currently in development is approaching completion and an impulse wave is likely to follow. A sustained close above $60.00 will confirm this notion.
These indications are why I believe that higher FGEN stock prices are on the horizon and the price action on the following FibroGen stock chart is why I believe this move could be epic.
Chart courtesy of StockCharts.com
This FibroGen stock chart contains all the price action since inception.
The consolidation wave that was highlighted earlier is currently developing right above the previous all-time high.
This previous all-time high was established shortly after inception, and it is very significant because stocks that have broken above previous all-time highs that were created shortly after inception have gone on to make epic moves toward higher prices. Facebook, Inc. (NASDAQ:FB) and Shopify Inc (NYSE:SHOP) share this characteristic, and their performance has been epic in proportions.
There are a number of reasons why this characteristic creates such powerful moves. For one, once a new high is created, there is no overhead resistance to contain the stock price from advancing, and the sky is essentially the limit.
Also, everyone who is holding a bearish short position is caught off guard. This entire bunch is inclined to cover, which fuels demand for the stock, propelling it higher.
I believe that this epic move is now on the horizon because after FGEN broke above the previous all-time high, it has returned to test it from above. This price action has manifested as a consolidation wave.
Returning to test a previous level of price resistance is known as a backtest and it serves to reinforce that the break above resistance was legitimate while simultaneously establishing this price point as a significant level of price support.
Backtests act like springboards, and once this one is completed, an accelerated move toward higher FGEN stock prices is expected to follow, in line with my expectations.
I am bullish on the prospects of FibroGen stock going forward. Not only do I believe that higher FGEN stock prices are on the horizon, but I believe the move will be of epic proportions.