GBT Stock Is All Set for an Explosive Move Toward Higher Prices
GBT Stock: Embedded Patterns Magnify the Reaction
I am focusing on Global Blood Therapeutics Inc (NASDAQ:GBT) stock because I have reason to believe that an explosive move toward higher stock prices is brewing. My reasoning is based on the indications I have been able to pull from the Global Blood Therapeutics stock chart.
The factor that makes GBT stock especially explosive is that there are currently a number of technical price patterns embedded within one another. When one gets resolved, it will complete another one, which will set off a chain reaction of completed price patterns, all implying that higher prices are on the horizon.
These patterns are visible using different time frames, so let’s begin with the price action that has occurred over the course of the last three months. This pattern is highlighted on the following stock chart.
Chart courtesy of StockCharts.com
This GBT stock chart has been annotated in order to highlight the constructive price action that has been responsible for the bullish move in this stock over the course of the last three months.
Constructive price action contains two waves: an impulse wave and a consolidation wave.
The impulse wave, highlighted in green, defines the stage in a bullish trend when the stock makes an unobstructed move toward higher prices. This wave captures all the gains created in a bullish trend.
The consolidation wave, highlighted in purple, defines the stage in a bullish trend when the stock price corrects and refrains from staging an advance. This wave is very important because it sets up the next impulse wave by creating the necessary environment where one can develop.
These waves work together in an alternating fashion, which creates a trend and allows it to flourish.
On December 1, Global Blood Therapeutics stock exited the consolidation wave in an upward direction. This event is highlighted on the stock chart as a breakout, indicating that the consolidation wave is complete and, therefore, a new advancing impulse wave is in development.
This notion of higher GBT stock prices will complete the technical price pattern, which is highlighted on the following nine-month stock chart.
Chart courtesy of StockCharts.com
This stock chart has been annotated in order to highlight the cup and handle pattern that has been in development for the last nine months.
This pattern contains two distinct troughs, where the first is much bigger than the second. These troughs are why this pattern is called a cup and handle pattern. This pattern is created because a significant level of price resistance, around 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 resistance level.
The constructive price action highlighted on the previous chart is suggesting that higher prices are now in development, and therefore, this cup and handle pattern is nearing completion. Once GBT stock closes above resistance, the pattern will imply that further gains are the horizon.
This cup and handle pattern and the constructive price action that preceded it are actually just small pieces of a much larger price pattern. This much larger price pattern is highlighted on the following Global Blood Therapeutics stock chart.
Chart courtesy of StockCharts.com
This stock chart has been annotated to highlight the cup and handle pattern that has been in development for two years. This may look like the previous chart, but the scale is completely different.
The cup and handle pattern that was highlighted on the previous chart is an embedded pattern that was responsible for creating the handle on this price chart. This bigger picture shows the scale and magnitude of the pattern that is currently in development.
The key takeaway from this price chart is that the significant level of resistance that has defined the pattern has not changed, and therefore, when Global Blood Therapeutics stock finally breaks above resistance, multiple patterns will be completed at the same time. This will magnify the reaction that can be expected once that event finally occurs.
The moving average convergence/divergence (MACD) indicator located in the lower panel increases the odds that such an event will occur. The MACD indicator is a momentum indicator that determines whether bullish or bearish momentum is influencing trading action in a stock. This indication provides very important information because a substantial move toward higher prices cannot be accomplished without bullish momentum driving it higher.
The bullish MACD cross that was created in September implies that this investment is currently geared toward higher prices, which substantially increases the odds that resistance will be broken, and therefore, the explosive move that I am anticipating is likely to occur.
Analyst Take:
There are a number of embedded patterns on the Global Blood Therapeutics stock chart that will be completed once the GBT stock price closes above resistance, which resides at around $43.00. Embedded patterns magnify the reaction when a pattern is completed, and therefore, an explosive reaction can be expected once this event occurs.
