Celgene Presents a Clear Bullish Setup

 | Aug 21, 2013 | 10:00 AM EDT  | Comments
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I have a well-defined bullish setup in Celgene (CELG) that we are going to look at today. The larger pattern is a bullish pattern of higher highs and lows. I also see price above both the 200- and 50-day simple moving averages, and that supports a buy-side setup.

Beyond this, the trade setup is what I like to call a Fibonacci price cluster, which is the coincidence of at least three key Fibonacci price relationships that come together within a relatively tight range. What I also like about this setup is that two of the projections within the cluster are what I call "symmetry" projections. These are essentially measured moves of prior corrective declines within the larger uptrend in Celgene. The zone we are currently testing and holding comes in at the $128.63-$132.10 area. The recent low was made on Aug. 15 at $132.75.

There is one more element to this trade setup. This is where I also apply the same Fibonacci ratios that I apply to the time axis of the market. You can see a cluster of time cycles illustrated on the daily chart below that identified Aug. 14-16 (give or take a day) as a time window for a possible low in Celgene to develop.

 

CELG Daily
DynamicTrader

 

So now that price and time parameters have come together on the daily chart, I have seen my initial buy triggers in this one. My risk is defined below the low end of this zone at the $128.63 area. My potential upside target at this point comes in at $154.92. If the trade does start to play out in my favor, I will move to a break-even stop and then trail it up. If the key support cluster is violated instead, I will stop myself out and ditch the trade.

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