Anticipating an Explosive Move Toward Higher IOVA Stock Prices

IOVA stock
iStock.com/Aramyan

IOVA Stock: These Two Signals Will Set the Wheels in Motion

Small-cap stocks and biotechnology stocks have been gaining a lot of attention recently, and for good reason. These two types of stocks are currently performing extremely well in the market, and they continue to forge new all-time highs.

Appropriately, I have decided to focus on Iovance Biotherapeutics Inc
(NASDAQ:IOVA), which is a small-cap biotechnology stock. I have chosen Iovance Biotherapeutics stock because I believe it is on the verge of an explosive move toward higher stock prices.

My beliefs are based on a number of technical indications that have either been generated or are currently in development.

The technical price pattern I am currently watching is highlighted on the following IOVA stock chart.

Chart courtesy of StockCharts.com

The pattern highlighted on this chart is a descending channel.

A descending channel is a price pattern characterized by a sequence of lower lows and lower highs, which is also the quintessential characteristic of a bearish trend.

Capturing this bearish pattern was achieved by connecting the peaks and troughs that were created by the sequence of lower highs and lower lows. This resulted in the creation of two downward-sloping trend lines.

These trend lines are important because they pinpoint where price support and price resistance reside.

In order to negate the bearish implications suggested by this pattern, Iovance Biotherapeutics stock needs to exit the pattern by breaking above resistance, which currently resides at $16.00.

This level of price resistance was just tested, and I am eagerly anticipating a resolution of this pattern. My bullish beliefs are being reinforced by the notion that this pattern is developing above the 200-day moving average.

The 200-day moving average is a price metric used to separate bullish investments from bearish ones. The fact that IOVA stock is trading above the 200-day moving average suggests that a bull market is in development.

The implications of the descending channel are being magnified by the fact that this pattern doubles as a consolidation wave, which is captured on the following chart.

Chart courtesy of StockCharts.com

This IOVA stock chart shows a wave structure and the influential momentum indicator that has been supporting it.

This wave structure contains impulse waves and consolidation waves.

Impulse waves are advancing in nature. As a result, they capture the stage in a bullish trend when a stock sustains a progressive move toward higher prices.

Consolidation waves are corrective in nature. As a result, the waves capture the stage in a bullish trend when a stock corrects and refrains from advancing.

These waves feed off each other, creating the stair-step price action that bullish trends are so famous for.

The descending channel doubles as a consolidation wave. A break above price resistance will suggest that higher Iovance Biotherapeutics stock prices, via an impulse wave, are likely to follow.

The development of an impulse wave will be supported by a bullish signal from the moving average convergence/divergence (MACD) indicator.

MACD is an influential momentum indicator that is used to distinguish whether bullish or bearish momentum is influencing the price action in a stock.

Bullish momentum implies that a stock is likely to appreciate, while bearish momentum implies the opposite.

A stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it. This is why the waves in this wave structure have been supported by the MACD indicator.

In August 2017, a bullish MACD cross was generated and an impulse wave followed. In April 2018, a bearish MACD cross was generated and a consolidation wave followed.

In order to suggest that higher prices are in development, IOVA stock needs to break above resistance outlined by the descending channel and a bullish MACD cross needs to be generated.

Once both of these signals are generated, I firmly believe that higher Iovance Biotherapeutics stock prices will likely follow.

These signals on their own would be reason enough to get excited about the prospects of an investment, but there is another factor that needs to be addressed because it magnifies their implications.

These signals will be generated after the pattern highlighted on the following chart has already been completed.

Chart courtesy of StockCharts.com

The completed price pattern highlighted on the above chart is a symmetrical triangle.

Triangle patterns are created when the price action is characterized by a sequence containing a series of higher lows and lower highs.

This pattern was captured by connecting the sequence of lower highs and the sequence of higher lows, resulting in two converging trend lines that depict a triangle.

These trend lines are very important because they pinpoint where price resistance and price support reside. This is very useful information because the pattern is only resolved once the stock price escapes from the parameters that have contained it.

On January 16, IOVA stock exited the symmetrical triangle in a bullish manner, suggesting that an explosive move toward higher prices was in development.

The reason why an explosive move is expected to follow is that the converging nature of the trend lines that define price support and price resistance causes energy to build up inside the pattern as it develops. This stored energy is only released when the stock price exits the pattern, which fuels the powerful move that follows.

Larger patterns produce equally large reactions. The symmetrical triangle on the stock chart was a tad over four-and-a-half years in the making, reinforcing the notion that a very large move is expected to follow.

The initial breakout of the symmetrical triangle produced a powerful result, but I believe this was the beginning of a move in its infancy.

My excitement is stemming from the fact that the next move higher will encompass an impulse wave and a bullish MACD cross.

This will be the first time that these signals are generated outside of the completed symmetrical triangle. I am anticipating that these events will launch the next big move toward higher stock prices.

Analyst Take

I am bullish about the prospects of Iovance Biotherapeutics stock.

I am waiting for two technical price signals because I believe that, once they are generated, they will signal when the next sustained move toward higher IOVA stock prices is in development.