These Are the Reasons Why SGEN Stock Will Likely Continue to Appreciate

SGEN stock
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SGEN Stock: The Path of Least Resistance Is Toward Higher Prices

I am focusing on Seattle Genetics, Inc. (NASDAQ:SGEN) stock because I happen to believe that it is destined for higher prices. My beliefs are based on a number of technical indications that were generated on the Seattle Genetics stock chart, which continue to augur further gains.

The first indication that caught my eye was a completed technical price pattern that is highlighted on the following SGEN stock chart.

Chart courtesy of StockCharts.com

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

Symmetrical triangles develop when the price action is characterized by a sequence containing a series of lower highs and higher lows.

Capturing this pattern was achieved by connecting the peaks and troughs that were created by the price action that characterized this pattern. The end result is two converging trend lines, which create a picture depicting a triangle.

Aside from just capturing the technical price pattern, these trend lines define where significant levels of price support and price resistance reside. This is important information because, in order to resolve the pattern, SGEN shares needed to escape from the pattern.

This is exactly what happened on May 31, when Seattle Genetics stock broke out above resistance, completing the symmetrical triangle. This breakout was accompanied by a powerful move toward higher prices, and the stock tacked on 20% in eight weeks.

The explosive move that followed was not a surprise because triangle price patterns are known for their explosive breakouts. The converging nature of support and resistance causes energy to build within the pattern as it develops. This energy is finally released when the pattern is resolved.

I believe that the completion of this symmetrical triangle augurs further gains because the completed symmetrical triangle doubles as a consolidation wave.

The implication of this completed price pattern, as a consolidation wave, is captured on the following Seattle Genetics stock chart.

Chart courtesy of StockCharts.com

This SGEN stock chart captures a wave structure consisting of impulse waves and consolidation waves.

Impulse waves are advancing in nature. They capture the stage in a bullish trend when a stock makes a progressive move toward higher prices. Consolidation waves are corrective in nature. They capture the stage in a bullish trend when a stock price corrects and refrains from advancing.

These waves are responsible for creating and sustaining a bullish trend.

As I mentioned earlier, the symmetrical triangle doubles as a consolidation wave. Its completion implies that an impulse wave is now in development, and that a sustained move toward higher stock prices will follow.

This notion of a sustained move toward higher stock prices is being reinforced by the moving average convergence/divergence (MACD) indicator.

MACD is a trend-following momentum indicator 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.

Momentum is an important force; a stock cannot sustain a move toward higher or lower prices unless the applicable level of momentum is supporting it.

This is exactly why the MACD indicator has the propensity to correctly confirm which wave is in development.

For example, impulse waves have been confirmed by bullish MACD signals and consolidation waves have been confirmed by bearish MACD signals.

The completion of the symmetrical triangle, which doubles as a consolidation wave, has coincided with a bullish MACD signal. These indications confirm that a sustained move toward higher prices, via an impulse wave, is now in development.

All this bullish price action is occurring within a well-defined bullish trend, which is captured on the following SGEN stock chart.

Chart courtesy of StockCharts.com

This chart captures price action consisting of higher highs and higher lows, which is the quintessential characteristic of a bullish trend.

This move toward higher prices has been in development since the second quarter of 2003. It has been responsible for taking Seattle Genetics stock from a low of $2.15 to where it currently resides at $71.19. This represents an awe-inspiring return of 3,211.16% over a 15-year period.

The uptrend line annotated on the above stock chart captures this awe-inspiring bullish trend. It was created by connecting the series of higher lows.

This uptrend line is very significant because, as long as the stock price continues to trade above it, I can only assume that a bullish trend remains in development and that higher prices will prevail over time.

Analyst Take

I am bullish on Seattle Genetics stock, and my belief that higher stock prices are likely to follow are based on a number of technical indications supporting such an outcome.

I will maintain my bullish outlook on SGEN stock until there are technical indications suggesting that a bullish outlook is no longer warranted.