Why This News Could Help KemPharm Stock Break Out: A Technical Analysis


KemPharm Inc. KMPH shares moved higher Thursday after it was announced the company is being added to the Russell 3000 and Russell 2000 indexes based on the index provider's annual reconstitution.

The inclusion to the indexes will be effective when the U.S. market opens June 28.

KemPharm Daily Chart Analysis

  • Shares are trading in what technical traders may call a pennant pattern. The stock is nearing the end of the pennant pattern and has started creeping toward resistance.
  • The stock is trading above both the 50-day moving average (green) and the 200-day moving average (blue), indicating sentiment in the stock is likely bullish.
  • Each of these moving averages may hold as an area of support in the future.

Key KemPharm Levels To Watch

  • KemPharm shares are nearing the end of the pennant pattern, and a breakout could move the stock strongly in the same direction as the breakout.
  • The pennant pattern happens after the stock makes a run up and the price is later condensed between the highs and lows until the price is able to break out of either support or resistance.
  • The price will likely continue to trade in the pennant pattern until the pattern gets closer to the point in the pattern when the price is very compressed.

What’s Next For KemPharm?

Bullish technical traders would like to see the stock trade in the pennant pattern for a bit longer before breaking out of the pattern resistance. A break above the pattern resistance could bring about a strong bullish move.

Bearish technical traders would like to see the stock fall below the pattern support. If the stock can break below the pattern support and then go on to hold it as resistance, the stock may see a strong downward move.

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