These Indications Support Further Gains in CPRX Stock

November 25th, 20171:26 am @

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CPRX Stock
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CPRX Stock: The Path of Least Resistance Is Geared Toward Higher Prices

I am focusing on Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) stock for a number for reasons. Categorically, Catalyst Pharmaceuticals stock is both a small-cap and a biotechnology stock.

Both of these sectors were lagging earlier this year, but that has quickly changed. Some of the best-performing investments are intertwining into these two categories. This makes CPRX stock an intriguing investment, but what makes it really stand out is that its stock chart is currently suggesting that higher prices are in development.

The Catalyst Pharmaceuticals stock chart is bullish on many time fronts. I will be focusing on a technical price pattern, constructive price action, and a key monument indicator that has supported the advance in CPRX stock. These indications continue to suggest that a bull market is still in development and that, therefore, higher stock prices are expected.

The Technical Price Pattern

The following Catalyst Pharmaceuticals stock chart illustrates the completed technical price pattern which is suggesting that higher prices are in development

CPRX Stock price Chart

Chart courtesy of StockCharts.com

This CPRX stock chart has been annotated in order to highlight the inverse head and shoulders price pattern that was just completed.

This pattern contains three troughs and a neckline. The first and third troughs represent the shoulders, and they are usually of equal size. The middle trough represents the head, and it is the largest. This pattern is created as a result of a  significant level of price resistance that prevents the stock price from making an advance. This level of resistance represents the neckline in this pattern.

On November 21, Catalyst Pharmaceuticals stock broke above the significant level of price resistance. The feat is highlighted on the stock chart as a breakout, and it serves to suggest that the pattern is complete and that higher CPRX stock prices are in development.

This completed inverse head and shoulders price pattern is actually an important piece of a much larger wave structure that has been supporting the advance in this stock since April 2016.

Constructive Price Action

The following Catalyst Pharmaceuticals stock chart illustrates the constructive wave structure that has been supporting the move toward higher stock prices.

 

CPRX Stock price chart

Chart courtesy of StockCharts.com

This CPRX stock chart has been annotated in order to highlight the constructive price action that has supported the advance in this investment since April 2016.

Constructive price action consists of two distinct waves that are responsible for creating and sustaining a bullish trend.

The wave highlighted in green is an impulse wave. An impulse waves captures the stage in a bullish trend when the stock price makes a sustained move toward higher prices. Once the impulse wave is complete, a consolidation waves follows.

The wave highlighted in purple is a consolidation wave. A consolidation wave captures the stage in a bullish trend when the stock price refrains from making an advance and, instead, a correction ensues. The function of this wave is to unwind any overbought conditions that were created during the preceding wave, in order to set the stage so a new impulse wave can develop.

These waves ensure that the trend remains healthy, because a healthy trend is a sustainable one.

The inverse head and shoulders price pattern defined the recent consolidation wave that was in development. Its completion is suggesting that a new advancing impulse wave is set to follow, and that higher CPRX stock prices are on the horizon.

This bullish wave structure has been supported by a very influential momentum indicator.

The Influential Momentum Indicator

The following Catalyst Pharmaceuticals stock charts illustrates the influential momentum indicator that both supported and confirmed the notion that higher stock prices are in development.

CPRX Stock price Chart

Chart courtesy of StockCharts.com

This stock chart has been annotated in order to highlight the moving average convergence/divergence (MACD) indicator.

MACD is a momentum indicator that uses the crossing of a signal line in order to determine whether bullish or bearish momentum is influencing the price action in a stock. This indication is influential because, in order for a stock to make a sustained move toward higher or lower prices, the applicable momentum is required.

For instance, in August 2015, a bearish MACD cross was generated. This indication implied that bearish momentum was influencing the trading action in Catalyst Pharmaceuticals stock and that lower prices were likely. After this bearish indication was generated, a violent sell-off ensued, which was exactly what the indication suggested.

In February 2017, a bullish MACD cross was generated, indicating that bullish momentum was again influencing the trading action in CPRX stock. Since that indication was generated, higher prices have prevailed and an impressive bull market has been in development.

As long as the signal lines responsible for creating the MACD signal remain in bullish alignment, I can only assume that the path of least resistance is geared toward higher stock prices.

Analyst Take:

The indications that I have outlined on the Catalyst Pharmaceuticals stock continue to suggest that higher CPRX stock prices are on the horizon. So, as a result, I will maintain a bullish view on this stock until there are technical indications suggesting that perhaps another view is warranted.

Article source: https://www.profitconfidential.com/stock/catalyst-stock/these-indications-support-further-gains-in-cprx-stock/