Exact Sciences Breaks Up From This Pattern, Signals Massive Reversal: Is A Bull Cycle In The Cards?

Zinger Key Points
  • Exact Sciences formed a bear trap on Friday before breaking up bullishly from a falling wedge pattern on Monday.
  • The company says it expects to report profitability when it prints its fourth-quarter earnings next month.

Exact Sciences Corp EXAS gapped up more than 16% to start the trading day on Monday and continued to surge an additional 5.6% before hitting and rejecting a resistance area near $58.50.

The molecular diagnostics company announced preliminary fourth-quarter results on Monday, ahead of its earnings print, expected on Feb. 21. Exact Sciences said it expected adjusted EBITDA profitability in the fourth quarter of 2022 and in full-year 2023, three quarters ahead of what it previously believed.

The company said it expected quarterly revenue between $550.7 million and $552.7 million, up 28% year-over-year, excluding COVID-19 testing.

On Friday, NYSE Executive Floor Director Jay Woods told Benzinga that Exact Sciences was the only Cathie Wood-connected name which looked set to trade higher from a technical analysis perspective. Woods noted the stock was trading above important moving averages (MAs), including the 20-, 50- and 200-day MAs.

Exact Sciences had also settled into a falling wedge pattern on the daily chart. The pattern is considered bearish until a stock breaks up through the upper descending trendline of the wedge.

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The Exact Sciences Chart: On Friday, Exact Sciences broke down from the lower descending trendline of the wedge to test the 200-day simple moving average (SMA) as support. The stock then bounced up from the level, to print a hammer candlestick on the daily chart.

  • The breakdown from the wedge pattern became a bear trap because on Monday the stock broke up from the pattern. If the pattern was recognized, Exact Sciences could be in for a larger trend reversal, but would eventually need to retrace to print a higher low above $46.17 to indicate an uptrend was on the horizon.
  • If Exact Sciences continued to trend above the 200-day SMA for a few more trading days, the 50-day SMA would cross above the 200-day, which would cause a golden cross to confirm. If that happened, Exactly Sciences would officially be trading in a bull cycle.
  • Exact Sciences had resistance above at $58.51 and $62.83 and support below at $54.79 and $49.84.

Photo: Courtesy Exact Sciences

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