IOVA Stock: One Signal Down, One to Go
Today’s focus is Iovance Biotherapeutics Inc (NASDAQ:IOVA) stock. I am returning to follow up on my report published on July 24: “Anticipating an Explosive Move Toward Higher IOVA Stock Prices.”
In that report, I outlined that Iovance Biotherapeutics stock was setting up to make a move toward higher prices. In order to confirm what was being painted on the company’s stock chart, I was waiting for two signals.
One of those signals has just been generated. It is suggesting that a move toward higher prices is now in development.
This signal is highlighted on the following chart.
Chart courtesy of StockCharts.com
The signal I was seeking was the completion of the descending channel that is highlighted on the IOVA stock chart above.
A descending channel is a technical price pattern that captures a bearish trend consisting of price action characterized by a series of lower lows and lower highs.
I captured this price pattern on the stock chart by connecting the peaks and troughs created by the price action that defined this pattern. The end result is two downward-sloping trend lines that depict a descending channel.
These trend lines provide very pertinent information because they pinpoint where price support and price resistance reside. In order to complete this pattern, Iovance Biotherapeutics stock needed to break above price resistance.
This is exactly what happened on August 14, when IOVA stock closed above price resistance, completing the descending channel. This now suggests that higher prices are likely to follow.
Of course, this outcome was not a complete surprise, because the pattern was developing above the 200-day moving average. The 200-day moving average acts as a dividing line that separates bullish investments from bearish ones.
Just the sheer fact that the pattern was developing above the 200-day moving average implied that a bullish resolution of the technical price pattern was likely.
The descending channel doubles as a consolidation wave. Its completion augurs further gains, but there is still one missing signal needed to confirm this bullish outcome.
The following Iovance Biotherapeutics stock chart captures both of these notions.
Chart courtesy of StockCharts.com
This IOVA stock chart captures a wave structure and an influential momentum indicator that are responsible for creating and sustaining bullish trends.
This wave structure consists of impulse waves and consolidation waves.
The impulse waves are highlighted in green on the above chart. They capture the stage in a bullish trend when a stock sustains a progressive move toward higher prices.
The consolidation wave is highlighted in purple. It captures the stage in a bullish trend when a stock corrects and refrains from advancing.
The descending channel doubled as a consolidation wave. Its corrective price action created the conditions necessary for a new advancing impulse wave to follow, which is what I am assuming is now in development.
In order to confirm my assumption, a bullish moving average convergence/divergence (MACD) signal is required.
MACD is an influential momentum indicator that uses the crossing of a signal line 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 why a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it.
The reason why I require a bullish MACD signal to confirm that an impulse wave is in development is that this indicator has the propensity to confirm which wave is in development.
In August 2017, a bullish MACD cross was generated and an impulse wave followed. In April 2018, a bearish MACD cross was generated and a consolidation wave followed. Each wave coincided with an applicable signal generated by the MACD indicator.
The good news is that the signal lines that create this signal are converging. As long as IOVA stock continues to appreciate, a bullish MACD signal is very likely to be generated in the weeks ahead. Then I’ll finally have all the necessary signals to suggest that a sustained move toward higher prices is in development.
Iovance Biotherapeutics stock has just completed a technical price pattern suggesting that higher stock prices are in development. In order to confirm that such a development is taking place, a bullish MACD signal is required. Until this signal is generated, the implications of the completed price pattern are unconfirmed.
Check out the original article here.
Author: Patrick Brik CFA, BAS