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Valeant's Chart Is Actually Looking Pretty Good For A Change

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Valeant's Chart Is Actually Looking Pretty Good For A Change

Following a price target hike from Cantor Fitzgerald on Wednesday, Valeant Pharmaceuticals Intl Inc (NYSE: VRX) shareholders find themselves in an unfamiliar place—fresh six-month highs.

After a disastrous 2015 and 2016, the battered pharma stock is now poised to finish the first half of 2017 higher by more than 24 percent on the year.

Cantor Fitzgerald says Valeant may now be past the worst of the bad news, and the stocks chart indicates the same.

After nearly two years of lower highs and lower lows, Valeant is now shoring technical signs that its dip to $8.31 in April was the bottom for the stock.

Related Link: Valeant Investors: Cantor Says It's Time To Stop Waiting For The Other Shoe To Drop

Since that time, Valeant pushed to $14.55 in May before pulling back to $11.80 at the end of the month. However, its recent surge above $17.50 means a higher high and a higher low have now been established.

Technical analysts use relative highs and lows as a measure of the trend of a stock. If a stock that's consistently making lower highs and lower lows, like Valeant did from mid-2015 until April 2017, the stock is in a downtrend. The first set of higher highs and higher lows is often an indication of a bullish trend reversal.

Further fueling the bull case for Valeant is the fact that the stock is now trading above its 200-day simple moving average for the first time since 2015. The 200-day SMA could now serve as potential support in the event of a pullback.

For now, hopeful bulls will be watching the $20 psychological resistance level to see if Valeant can maintain its positive momentum. A breakdown below $11.80 would be a bearish sign that a lower low is on the way.

At time of publication, the stock was trading at $18.12, up 5.6 percent on the day.

Joel Elconin contributed to this article.

Posted-In: Long Ideas Education Technicals Top Stories Trading Ideas General Best of Benzinga

 

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