Moderna, Inc MRNA was spiking higher on Thursday, holding up better than the general markets, which saw the S&P 500 rally over 1% off the open before giving it all back.
On Thursday, the U.S. Food and Drug Administration's Commissioner Robert Califf said at a U.S. House Agriculture subcommittee meeting the agency plans to work to accept Moderna's application for its COVID-19 vaccine for kids under 5 without delay.
The bump up in the pharmaceutical giant’s stock caused it to break up bullishly from a falling channel pattern in which Moderna has been trading since March 18.
The pattern is bearish for the short term but can be bullish down the road. When a stock breaks up from the pattern, it can indicate a strong reversal to the upside is on the horizon.
- For bearish traders, the "trend is your friend" (until it's not) and the stock is likely to continue downward. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
- Bullish traders who aren’t already in a position can watch for Modern to back test and hold above the upper descending trendline of the falling channel for a solid entry point. Traders who are already holding a position may choose to take profits at resistance levels if the stock is unable to easily break through the areas.
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The Moderna Chart: Although Moderna broke up through the falling channel, the stock hasn’t confirmed an uptrend due to the lack of a higher low. When Moderna popped up to its high-of-day on Thursday, the stock was unable to rally above the most recent confirmed lower high at $155.46, which may give bullish traders caution.
- If Moderna closes the trading session near its high-of-day price, it will print a bullish Marubozu candlestick, which could indicate higher prices will come on Friday. If the stock closes the trading day with an upper wick, it will print a shooting start candlestick, which could indicate a reversal to the downside is on the way.
- Bullish traders will want to see Moderna close the day above the 21-day exponential moving average (EMA), which the stock regained intraday. If Moderna is able to remain above the level for a few more days, the eight-day EMA will cross above the 21-day, which would give bulls more confidence going forward.
- Moderna has resistance above at $147.57 and $179.54 and support below at $122.01 and the psychologically important $100 level.
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