Technical Analysis: Juno Stock Is Setting Up Its Next Advance

JUNO Stock
Credit:iStock.com/phongphan5922

JUNO Stock: The Next Move Is Almost Upon Us

The stock market is red hot and new all-time highs are a daily occurrence. The market is sizzling, which allows for sizable moves to develop. I am focusing on Juno Therapeutics Inc (NASDAQ: JUNO) stock because there are certain technical developments on the JUNO stock chart that have the potential to lead to one of these sizable moves that I speak of.

When I talk about technical developments, I am referring to a particular wave pattern and a number of indications on the Juno Therapeutics stock chart. Using the company’s stock chart in order to generate views and trading strategies is known as technical analysis. I prefer this method of analysis over conventional methods like fundamental analysis because the indications produced are timely, which is a crucial factor in a trading strategy.

The following Juno Therapeutics stock chart illustrates the technical developments that will dictate the next move in this stock.

Juno Therapeutics stock chart

Chart courtesy of StockCharts.com

There are a number of technical developments that have been annotated on this JUNO stock chart.

The first technical development involves the price action, in which an alternating wave structure known as constructive price action is highlighted on the stock chart. Constructive price action consists of a sequence of impulse waves and consolidation waves.

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The impulse waves, which are highlighted in green, define the stage in a bullish trend where the stock price stages a progressive advance towards higher stock prices.

The consolidation waves, which are highlighted in purple, define the stage in a bullish trend when the stock price refrains from advancing, and the choppy trading action that characterizes this wave unwinds any overbought conditions that were created in the impulse waves that preceded it. Unwinding an overbought condition creates the necessary environment so a new advancing impulse wave can develop.

In a bull market, these waves in an alternating wave structure create the necessary building blocks so the trend can remain stable and sustainable.

Since late August, This stock has been confined to a consolidation wave. This wave is developing as a triangle pattern where two converging trend lines are defining it. These trend lines act as a level of price support and price resistance. Whether the stock price breaks above resistance or below support will dictate which direction JUNO stock is heading in next.

The triangular pattern that defines the consolidation wave is a very powerful pattern and when it is completed, a sizable move like the one that preceded it is expected to take hold. This notion is based on the theory behind this wave structure that states that impulse waves separated by consolidation wave have a high likelihood to match or exceed the size of the original impulse wave. If I put this theory to work, it suggests that a bullish resolution of the consolidation wave would yield an impulse wave with a target of $59.00.

The second technical development involves the moving average convergence/divergence (MACD) indicator located in the lower panel of the JUNO Therapeutics stock chart. MACD is a trend-following momentum indicator that uses the crossing of a signal line to distinguish whether bullish or bearish momentum is influencing the trading action in a stock.

Momentum is required to stage a bullish advance or a bearish decline, so knowing which one is influencing the trading action in Juno stock has been a good predictor of whether or not Juno Therapeutics stock was set to advance or decline via an impulse wave or a consolidation wave.

In mid-August, a bullish MACD cross was generated, indicating that bullish momentum was influencing the stock price. This indication correctly suggested that an advance was in development via an impulse wave.

The same can be said about the bearish MACD cross that was generated in mid-September, except this indication correctly implied that the stock price was set to decline via a consolidation wave.

The signal lines that created this indication are currently still in bearish alignment but they are converging. The completion of the consolidation wave will coincide with a bullish MACD cross, which will suggest that a move towards higher Juno Therapeutics stock prices is in development.

Analyst Take: 

There is a beautiful setup on the Juno Therapeutics stock chart that is perfectly aligned for an advancing move in JUNO stock to develop. I am looking for the completion of the consolidation wave, which will coincide with a bullish MACD cross to indicate that higher stock prices are on the horizon.