CASI Stock: One of These Levels Is Going to Give
The best time to get involved in an investment is getting in right before it makes a move. I am focusing on CASI Pharmaceuticals Inc (NASDAQ:CASI) stock because I believe that CASI stock is sitting in a sweet spot and is about to make a significant move.
CASI Pharmaceuticals stock is currently caught in between significant levels of price support and price resistance. These levels are converging, which means that in the not-too-distant future, the stock price is either going to break above price resistance or break below price support.
Investors who are bullish on CASI stock would love to see the stock price break above resistance, which would open the door for further gains to follow. Bearish investors, on the other hand, would love to see the stock price break below support, which would open the door toward lower prices.
I am going to begin by highlighting the significant level of price resistance, which is captured on the following CASI Pharmaceuticals stock chart.
Chart courtesy of StockCharts.com
This stock chart highlights a significant level of price resistance, which resides at $8.50. This level price resistance was first established in May 2018 and has thwarted all attempts at moving beyond it.
CASI Pharmaceuticals stock’s inability to move beyond this level of price resistance has resulted in the creation of two very distinct troughs. The first trough is much larger than the second. These troughs characterize a technical price pattern known as a cup and handle pattern.
This pattern is significant because when resistance is finally broken, it will complete the pattern. This would suggest that higher CASI stock prices are likely to follow.
The great thing about this pattern is that not only will its completion imply that higher prices are likely to follow, but it will also provide a price objective for that expected move.
This price objective is obtained by taking the depth of the cup and extrapolating that value above the significant level of price resistance that defined the pattern in the first place. Applying this theory in practice suggests that when CASI stock finally breaks above resistance, $11.00 will become a viable price objective.
The caveat is that this bullish outcome is based on the stock’s ability to sustain a close above resistance. There was a valiant attempt made on August 13, 2018, but the CASI Pharmaceuticals stock was not able to sustain a close above resistance.
Moving forward, I am going to highlight a significant level of price support, which is captured on the following CASI Pharmaceuticals stock chart.
Chart courtesy of StockCharts.com
The CASI stock chart captures a level of price support that is currently defined by an uptrend line.
This uptrend line captures a bullish trend that began its development in August 2017, when the price action began making a series of higher highs and higher lows. That is, of course, the quintessential characteristic that defines a bullish trend.
This bullish price action has been responsible for taking CASI stock from a low of $0.93 in August 2017 to where it currently resides at $7.38. This represents an incredible 693% return in a year’s time.
The uptrend line highlighted on the CASI Pharmaceuticals stock chart was created by connecting the troughs that were created by the bullish trend. This uptrend line is significant because it pinpoints where price support resides. From a significance standpoint, the amount of times this uptrend line has been tested is a testament to its importance.
Support defined by the uptrend line currently resides at $7.25. As long as the stock price is trading above the uptrend line, I can only assume that a bullish trend is in development and higher prices are likely to prevail.
At this moment, resistance resides at $8.50 and support resides at $7.25. There is currently $1.25 separating these two significant levels. The level that breaks first will determine which direction the stock price will trend in. The bulls would love nothing more than to see resistance fall, while the bears are hoping that support fails.
Determining which scenario is going to play out is very speculative in nature, but I do know something for sure. Both these levels continue to converge, which means that one of these levels is going to fall in the not-too-distant future. The stock price is going to make a move as a result.
I believe that CASI Pharmaceuticals stock is on the verge of making a significant move. This move I am expecting is going to be determined by the stock’s ability to either break above price resistance or break below price support. Whichever level gives way first will determine which direction CASI stock is heading in.
Check out the original article here.
Author: Patrick Brik CFA, BAS