Wait for the Pullback on BioCryst Pharmaceuticals

 | Mar 20, 2017 | 1:29 PM EDT
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BioCryst Pharmaceuticals (BCRX) has run up sharply in the past month. Prices are extended so potential buyers should wait for a pullback before considering going long.

Before we get too far along, let's look at the charts and indicators to see if we want to go long.

In this daily chart of BCRX, above, we can see prices have more than tripled from the lows in April, May and June. Prices doubled by August and then corrected the run-up with a sideways period of trading. Another rally from early November saw prices soar from $4 to $9 last week. BCRX is looking extended so traders should be patient and await a pullback before considering going long. BCRX is above the rising 50-day and 200-day lines. The On-Balance-Volume (OBV) line has moved higher with the price action and confirms the advance. The Moving Average Convergence Divergence (MACD) oscillator is extended on the upside and has begun to narrow. A crossover of the two moving averages that make up the MACD oscillator would be a signal to take profits on longs.

In this weekly chart of BCRX, above, we can see prices moved sideways from 2014 to the middle of 2015 when a decline developed. Prices move down into early 2016 and ended the selloff with a gap lower. Prices quickly bottomed and have moved higher since. The 40-week moving average line is positive and so is the MACD oscillator. What is interesting and potentially very bullish is the On-Balance-Volume (OBV) line, which has been in an uptrend the past three years. Someone has been buying BCRX steadily -- even during its big decline.

In this Point and Figure chart of BCRX, above, we can see the recent breakout with an upside price target of around $14. I am not sure it will happen, but a pullback to around $7 will be the place to purchase BCRX with a sell stop looking for $14 longer term.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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