PTN Stock: A Completed Backtest Acts Like a Springboard
The current trading environment is no longer like the walk in the park that characterized 2017. 2018 is quite the opposite, as that low-volatility environment has given way to a treacherous high-volatility environment where violent gyrations in price have become the norm.
It’s easy to lose your head in such an environment, but I will continue to believe that volatility will subside and that cooler heads will once again prevail because, eventually, that is what always happens.
I am returning to focus on Palatin Technologies, Inc. (NYSEAMERICAN:PTN) because there have been new technical developments on the Palatin Technologies stock chart that are reinforcing the notion that a move toward higher PTN stock prices is now in development.
These new developments are highlighted on the following Palatin Technologies stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the Palatin Technologies stock chart is a price channel.
A price channel is a technical price pattern that is characterized by a static level of price resistance and a static level of price support. A stock is contained within this pattern as long as it oscillates in between these levels. Only when support or resistance is broken is the pattern resolved and the stock free to continue moving in that direction.
Resistance on the PTN stock chart resided at $1.05 and support resided at $0.80. Two parallel trend lines were used to define these significant price points.
On March 21, after four months of development, PTN stock finally broke out above resistance, completing the price channel, which implied that Palatin Technologies stock was now free to appreciate.
After a brief move higher, PTN stock has returned to test the level of resistance that defined the price channel. Returning to test a previous level of price resistance is known as a backtest, and this price action is very common. It serves to reinforce the notion that the breakout above resistance was legitimate while simultaneously establishing this price point as a new level of price support.
Backtests act like springboards, and a close above $1.20 will confirm the notion that higher PTN stock prices are in development.
This notion of higher stock prices is being supported by the bullish trend that preceded the price channel.
The wave structure responsible for creating this bullish trend is highlighted on the following Palatin Technologies stock chart.
Chart courtesy of StockCharts.com
This PTN stock chart highlights the wave structure that has been responsible for creating and sustaining the bullish trend in Palatin Technologies stock.
This wave structure consists of impulse waves and consolidation waves.
The waves highlighted in green are impulse waves, and they are advancing in nature. They define the period in a bullish trend when a stock makes a sustained move toward higher prices.
The waves highlighted in purple are consolidation waves, and they are corrective in nature. They define the period in a bullish trend when a stock stages a correction.
Corrections are necessary for the development of a bullish trend because they create the conditions that allow for the development of an impulse wave once the consolidation wave is complete.
The price channel, which doubles as a consolidation wave, was completed on March 21, suggesting that an impulse wave has been in development ever since.
The notion of higher PTN stock prices suggested by the impulse wave is also being supported by the moving average convergence/divergence (MACD) indicator.
MACD is an influential momentum indicator that is used to determine whether bullish or bearish momentum is influencing the price action in a stock.
Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices. This is influential information because a stock cannot sustain a move in either direction unless the applicable momentum is supporting it.
Every bullish MACD signal has coincided with an impulse wave, and higher prices have prevailed. The same can be said about a bearish MACD signal, because, every time one was generated, it coincided with a correction that was captured by a consolidation wave.
On March 21, the completion of the price channel coincided with a bullish MACD signal and, together, these indications suggest that higher Palatin Technologies stock prices are in development.
This notion of higher prices will be reinforced once PTN stock closes above $1.20, confirming that the backtest, which is known to act as a springboard, is complete.
I continue to maintain a bullish view on Palatin Technologies stock because a number of technical indications continue to support the notion that higher PTN stock prices are currently in development.