Momenta Pharmaceuticals Stock Is on the Verge of Breaking Out

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MNTA Stock: Watching and Waiting for a Break Above Resistance

It was only a few months ago that a madman could be testing nuclear bombs and the markets would just shrug off this news as if it never occurred. This era was marked by low volatility, and nothing could crack the market’s demeanor.

Wow, how things have changed! This demeanor cracked earlier this year and, as a result, volatility is high and continues to be elevated. This has resulted in an emotional market that swings wildly in both directions. The prospect of a trade war is the current catalyst causing the market to swing lower.

I am in the camp that continues to believe that volatility will subside and that higher index values will once again prevail. With this notion in mind, I continue to focus on investments that are primed to make a move toward higher prices.

I am focusing on Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) stock for a couple of reasons. The first reason is that MNTA stock is on the verge of breaking out toward much higher prices. The second reason is that Momenta Pharmaceuticals stock is an excellent example of why it is always very important to view a stock chart using multiple time frames.

For instance, the following Momenta Pharmaceuticals stock chart illustrates the price action since early December.

Chart courtesy of StockCharts.com

This MNTA stock chart highlights a bullish trend that is characterized by a sequence containing a series of higher highs and higher lows. This is, of course, the quintessential characteristic that defines all bullish trends.

Connecting the sequence of higher lows creates an uptrend line. This uptrend line not only defines the bullish trend, it acts like a very significant level of price support.

Since this bullish trend developed in December, there have been four points of contact on this trend line. Each and every time, the MNTA stock price bounced off this level of price support and higher prices prevailed.

Currently, the fifth point of contact is being put to the test. As long as MNTA stock is trading north of this uptrend line, I can only assume that a bullish trend is in development. Failing to maintain this uptrend line would suggest that this bullish trend in Momenta Pharmaceuticals stock has come to an end.

This bullish trend recently peaked at $19.00, and this price point is very significant.

The following Momenta Pharmaceuticals stock chart illustrates why $19.00 is currently a very significant level of price resistance.

Chart courtesy of StockCharts.com

The pattern highlighted on the MNTA stock chart is a descending channel. A descending channel is created when the price action is characterized by a uniform sequence of lower highs and lower lows.

Descending channels are defined by connecting the uniform sequence of lower highs and lower lows, which creates two downward-sloping parallel trend lines. These trend lines act like levels of price resistance and price support, and $19.00 is currently where resistance outlined by this pattern resides.

Breaking above resistance will complete the pattern, implying that Momenta Pharmaceuticals stock is free to appreciate further.

The bullish implications of this pattern are magnified when this pattern is taken in context within MNTA stock’s larger bullish trend.

This larger bullish trend is highlighted on the following Momenta Pharmaceuticals stock chart.

Chart courtesy of StockCharts.com

This MNTA stock chart illustrates a bullish trend that has been constructive in nature.

Constructive price action consists of two predominant waves: an impulse wave and a consolidation wave.

The impulse wave, highlighted in green, captures the stage in a bullish trend when a stock makes a sustained move toward higher prices. This is why impulse waves are advancing in nature.

The consolidation wave, highlighted in purple, captures the stage in a bullish trend when a stock refrains from advancing and instead corrects. This is why consolidation waves are corrective in nature. Consolidation waves are a necessary component of every bullish trend because they serve to create the necessary conditions so an impulse wave can initiate.

Impulse waves and consolidation waves work in tandem in order to create and sustain a trend.

The descending channel doubles as a consolidation wave, and a break above $19.00 would suggest that an impulse wave is in development, which translates into much higher Momenta Pharmaceuticals stock prices.

Analyst Take

The markets might be unnerving right now, but that does not mean there are not investments primed for further gains. I am watching Momenta Pharmaceuticals stock at this moment because a break above $19.00 would complete a wave structure suggesting that further gains are likely to follow. Until such an event unfolds, a neutral view on MNTA stock is warranted.