HALO Stock Is on the Verge of a Bullish Breakout

halo stock analysis
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HALO Stock Is Geared Toward Higher Stock Prices

If I sound like a broken record, it’s probably because I continue to focus on volatility, which has shown its ugly face in 2018. Like an unwelcome house guest, volatility is causing the homeowner much anxiety as the markets continue to gyrate in both directions.

In 2017, this market had the ability to shrug off all market-moving events, but now it has to come to grips with every piece of market-moving news, and the mood is quite manic.

Volatile markets are difficult, but that does not mean it is a reason to throw in the towel. Markets are dynamic, and there are always compelling investments to be made.

As a technical analyst, I believe that a compelling investment contains a price chart that implies that the stock in question is set to make a move. So it should come as no surprise that I am currently focusing on Halozyme Therapeutics, Inc. (NASDAQ:HALO). I have the inclination to believe that Halozyme stock is on the brink of staging a very impressive move toward higher HALO stock prices.

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At this exact moment, the stock is testing a significant level of price resistance, and I believe that, once this level is successfully breached, much higher prices will prevail.

This level of price resistance is highlighted on the following Halozyme stock chart.

Chart courtesy of StockCharts.com

This HALO stock chart illustrates that the significant level of price resistance I speak of currently resides at $21.35.

This level of price resistance was first established on December 14, 2017, and after a failed attempt to move beyond it on December 29, a substantial correction followed.

Halozyme stock did not bottom until February 9, 2018, after the stock price shed 23.9% of its value from its peak, and it has been climbing ever since. The infamous level of price resistance that was established in December is now being tested, and I believe that a break above this price point will open the door to much higher stock prices.

This notion of a move toward higher HALO stock prices is currently being reinforced by an influential momentum indicator, which is highlighted on the following Halozyme stock chart.

Chart courtesy of StockCharts.com

The influential momentum indicator highlighted on this stock chart is the moving average convergence/divergence (MACD) indicator.

MACD is used to determine whether bullish or bearish momentum is influencing the price action in a stock, using the crossing of a signal line. This indicator gives very pertinent information because a stock cannot stage a sustained move toward higher or lower prices without the applicable momentum supporting it, which is why this indicator is very influential.

The MACD signals generated on the Halozyme stock chart are a testament to this notion.

For example, in September, a bullish cross was generated, indicating that bullish momentum was influencing the price action in HALO stock and, appropriately, the share price staged an advance.

In January, a bearish cross was generated, indicating that bearish momentum was influencing the price action in this stock and, not surprisingly, the share price proceeded to sell off.

Currently, a bullish MACD cross is being generated, and this is happening just as resistance at $21.35 is being tested. The momentum implied by the bullish cross increases the odds that this level of resistance will be broken, because the path of least resistance is now geared toward higher prices.

I have already stated that a break above resistance will open the door to much higher prices, and this notion of higher prices is captured using the following Halozyme stock chart.

Chart courtesy of StockCharts.com

This HALO stock chart illustrates that, since 2012, Halozyme stock has been in an orderly and well-defined bullish trend. This bullish trend contains the quintessential characteristic that defines all bullish trends, which is a sequence containing a series of higher highs and higher lows.

Capturing this bullish trend was effectively accomplished using an ascending channel. This technical price pattern was created by using two upward-sloping trend lines. Price support was established by connecting the higher lows, and resistance was established by connecting the higher highs.

The ascending channel is a simple tool to use and, as long as the stock price continues to oscillate within it, I can only assume that this well-defined bullish trend is still in development, and that higher stock prices will prevail over time.

I have the inclination to believe that HALO stock is now primed to make a move toward higher stock prices, and that the resistance level outlined by the ascending channel is where the stock price is likely heading.

I will continue to carry this inclination toward higher prices until the relative strength indicator (RSI) generates a bearish signal.

To clarify, RSI is an oscillator that measures overbought and oversold conditions. These conditions are measured by using an oscillator that fluctuates between zero and 100. A reading above 70 is overbought, while a reading below 30 is oversold.

Once an indication becomes overbought or oversold, it can remain there for some time. A bearish signal is only generated when this RSI indicator crosses above 70 and then back below it, suggesting that the advance has run its course.

Over the past six years, there have been three such instances when the RSI oscillator crossed above 70 and then crossed back below it. Each and every time such an event unfolded, the stock prices hit resistance outlined by the ascending channel. If history is a precursor to the future, I believe that such an exact event is set to unfold, and I am eagerly looking forward to seeing it play out.

Analyst Take

I am bullish on Halozyme stock because it is on the verge of breaking above a level of price resistance that will open the door to much higher stock prices. I will maintain a bullish view on HALO stock until the indications I outlined suggest that such a view is no longer warranted.