Forty Seven (FTSV) made a solid bullish movement as predicted in our last analysis piece for this stock, as it broke above the bullish pennant to hit a high of just under $24 in December 2018. The price has since cooled off from that point, retreating to about $13 before resuming a climb that peaked at $18. What's the outlook for this pair as we head toward the end of first quarter 2019?
FTSV’s parent company has developed a drug known as 5F9, which is a humanized IgG4 subclass monoclonal antibody that's presently undergoing Phase 1b/2 clinical trials. It's also working on FSI-189, an antibody that can be used to treat solid tumors.
The next earnings report for FTSV comes up on March 12, 2019. At the press conference, it's likely that FTSV also will provide updates on its ongoing clinical trials. The earnings numbers and progress reports on the clinical trials could sway the sentiment of investors, and this may be reflected in the price moves for the week which begins on Monday, March 11, and ends on Friday March 15, 2019.
On the FTSV weekly chart, we see the price candle that ended the week on March 8, 2019, closing right at the support price level of $16.01. We also can see that this candle and the preceding candle have formed a bearish engulfing candlestick pattern, which are both captured in the upward channel. A look at the chart will show that the $16.01 price level was an area of historical resistance at several times: Between July and October 2018, as well as between late December 2018 and early March 2019. Indeed, this level was only broken by the candle for the week that ended on March 1, 2019. The $16.01 price level is therefore expected to play a role reversal function, switching from a resistance to a support. This support level is now being tested.
FTSV Weekly Chart: March 10, 2019
As we step down to the daily chart below, we see the price action much more clearly. We can see that price action has just about closed below the lower border of the upward channel, but has not achieved the 3% penetration level required to confirm the downside break of this channel.
Below this price area, we have other areas where price is likely to find support, based on previous resistance levels (September 2018) that have switched roles to become support levels (January 2019). These price levels are at:
- S2 ($15.29)
- S3 ($13.94)
FTSV Daily Chart: March 10, 2019
A further look at the chart will show the nine-day exponential moving average line, which has been broken by the latest daily candle to the downside. So we expect the 9EMA to provide resistance to new price candles that will form along the way.
- Trade Scenario 1
The presence of the bearish engulfing pattern on the weekly chart, the break of the 9EMA line to the downside, predominance of selling volume and the near breach of the lower border of the ascending channel are pointers to the downside pressure that FTSV is presently facing. If the subsequent candles are able to close below the lower border of the channel, a downside break will be confirmed and we will see prices heading down to the S2 and S3 support levels seen on the charts ($15.29 and $13.89)
Trade Scenario 2
If the breakout fails to occur conclusively, then the price action will continue to occur within the ascending channel. This will entail the bounce on the channel’s lower border by the price candles/bars, pushing prices up to the channel’s upper border. We need to see some good buying volume for this price move to occur.
- Long term: Bearish
- Medium term: neutral to bearish.
Please note: The main analysis was done on a weekly chart. It takes a whole week for a candle to form, therefore traders must be patient to allow the relevant candles to close in relation to the key support/resistance levels before making trade decisions.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.