GBT Stock: Awaiting a Break Above Resistance
I am once again focusing on Global Blood Therapeutics Inc (NASDAQ: GBT) stock because I continue to believe that a move toward higher GBT stock prices is on the horizon. These beliefs surrounding Global Blood Therapeutics stock is based on a method of investment analysis called technical analysis.
Technical analysis is based on the notion that stocks have embedded trends, and therefore, historical price and volume data points can be used to speculate on the direction a stock is likely heading next. I have been using this method to create investment strategies for nearly two decades and feel that I am well-equipped to outline the developments that have presented themselves on the GBT stock chart.
The following stock chart is why I believe that a move toward higher prices is on the horizon.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the this stock chart is a cup and handle pattern.
Cup and handle price patterns contain two distinct troughs, where the first is much larger than the second. These troughs are created because a significant level of price resistance, which currently resides at the $43.00 level, prevents the stock price from advancing beyond it. In order to complete the cup and handle pattern, GBT stock needs to close above this price point.
A completed cup and handle price pattern will suggest that higher Global Blood Therapeutics stock prices are on the horizon. The great thing about these patterns, aside from suggesting the direction a stock is likely to take, is that they are also instrumental in producing a potential price objective for the move that is likely to come.
This potential price objective is created by taking the depth of the cup and extrapolating that value above the significant level of price resistance that defined the pattern. This method produces a price objective of $71.00.
This $71.00 price objective comes into play once resistance is finally broken. There has already been one failed attempt, but the indications on the following Global Therapeutics stock chart still suggest that the path of least resistance is geared toward higher prices, which increases the odds that resistance will be broken.
Chart courtesy of StockCharts.com
This stock chart illustrates that since December 2016, a bullish trend has been in development. This bullish trend has been captured using a simple uptrend line that was created by connecting the series of lows that defines this bullish trend.
The uptrend line is a simple tool that acts like both a dividing line and a level of price support. As long as the GBT stock price is trading above it, I can only assume that the bullish trend that began in December 2016 is still intact and, therefore, higher stock prices will likely follow. The current trend toward higher prices is being supported by the moving average convergence/divergence (MACD) indicator, which is currently in bullish alignment.
The MACD indicator is a momentum indicator that is used to determine whether bullish or bearish momentum is influencing the trading action in a stock. This indication provides important and influential information because a sustained move towards higher prices cannot occur without the applicable bullish momentum supporting it.
A bullish MACD cross was created in September of this year and it implies that Global Blood Therapeutics stock prices are geared toward higher prices. Previous MACD signals have correctly determined whether or not GBT stock was set to increase or decrease in price. As long as the MACD signal lines remain in bullish alignment, it increases that the odds that resistance at $43.00 will successfully be broken and higher stock prices will prevail.
I am watching for the resolution of a technical price pattern on the GBT stock chart that will determine whether or not much higher Global Blood Therapeutics stock prices will prevail. A confirmed close above $43.00 would complete the pattern and imply a bullish outcome.