Macro And Swing Opportunities In VRTX

On February 23rd, a significant macro breakout occurred in Vertex Pharmaceuticals Inc. (VRTX). A complex inverse continuation head and shoulders pattern triggered, via a breakaway gap, accompanied by a surge in volume. Both the gap and volume added significance to the breakout above the pattern’s neckline, which was also a major resistance level for four years. Recently, there was a retest of the neckline at 44 dollars that held. The price objective indicated by the macro pattern is $75, which is an approximate 58 per cent gain from current price levels.  Outlined below, in addition to the macro trade is a swing opportunity. 

Chart 1: Macro Setup: The long-term weekly chart below outlines the macro setup. The February breakout above the neckline cleared a major resistance level. Price objective: $75.

chart

Photo: Zev Spiro

Chart 2:  Macro Breakout: The daily chart below illustrates the macro breakout which occurred via a breakaway gap and a surge in volume.  The presence of the gap and volume surge add validity to the breakout. In addition, displayed is the retest of the neckline that held, also raising confidence in the setup. Target: price objective of 75 dollars is obtained by measuring the height of the pattern and expanding higher from the neckline, by the same distance. Protective Stops: trigger on a confirmed move back below the neckline, currently $43.75. Minor up trend line: may offer an excellent opportunity to add to longs, or initiate.

chart

Photo: Zev Spiro

Chart 3: Swing setup:  After the macro pattern triggered, the price began consolidating between two converging boundary lines in a symmetrical triangle pattern. This pattern is typically a continuation pattern and the declining volume suggests continuation of the previous up trend. Trigger: confirmed move above the upper boundary line, Target:  minimum expected objective is approximately 58-59 dollars depending on the trigger price,  Protective Stops: confirmed move below the boundary line. Trail Stop: confirmed break of the minor up trend line.

chart

Photo: Zev Spiro

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Disclaimer: The information contained herein is not guaranteed. This is not a solicitation of any order to buy or sell. This material is based upon information that I consider to be reliable, but I do not guarantee its completeness or accuracy. Assumptions, opinions and recommendations contained herein are subject to change without notice, and I am not obligated to update the information contained herein. I may have a position/s in the security or securities mentioned. This communication, including any attachments, is for the exclusive use of the intended recipient(s) and/or the intended recipient’s designees. Any use, retention or dissemination by a person other than the intended recipient is strictly prohibited. If you are not the intended recipient or designee, please notify the sender immediately by return e-mail and delete/destroy all copies of this communication.

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