Today’s trade idea has a really attractive technical setup that if all goes to plan could see shares move up in a quick fashion for strong gains. Anavex Life Sciences Corp. (NASDAQ:AVXL) had quite the roller coaster ride over the last year, heading up from the $1 level in June 2015 all the way up to $14.84 in early-November before abruptly retreating back to $3.16 within two weeks of hitting its November high.
With shares finally on the move higher, we notice one last hurdle before this stock has the momentum to head higher in a meaningful way. The $5.75 level looks to be some near term resistance. Above that, further resistance looks to be all the way up at $7.75. As for support, the $5.00 level looks to be static and dynamic support, as a short term trend line has developed over the last few months.
Our trade strategy would be to wait on the sidelines until the stock is able to break and close above the $5.90 level on strong volume. Upon a successful entry, we would place a price target of $7.70 and a stop loss level of $4.90 to limit downside risk. Based on a $5.90 entry level, our upside potential looks to be 30.5% while our downside risk is capped at 16.9%.
The stock price direction for the day for AVXL is DOWN. The stock is experiencing a strong downtrend as of late, with a decrease of more than 10 percent in the last five days. Based on BullishInvestor.com’s proprietary algorithms, AVXL is currently signalling NEUTRAL.
The most recent Candle Stick pattern for AVXL is the Belt-hold.
There are two possible reasons for the Hold rating currently given to AVXL. The first reason is that there may be indecision among the technical indicators or most of them may be neutral for AVXL. If the stock chart looks flat lined or is in the midst of a trend direction change, most likely this is why AVXL is showing Neutral. If, however the stock is currently in a visible up or down trend, the reason for the Hold may be because the BULLISH or BEARISH rating has already passed.
The last SELL was registered on Apr 02, 2024 when AVXL was trading at $4.54. Armed with this knowledge, there may still be some more strength left in this current trend or it may be near a tipping point, the market has not given a clear indication yet.
As such, it may be a wise decision to hold your stock or continue to wait on the sidelines in AVXL until BullishInvestor.com changes the rating for AVXL.