Vertex Pharmaceuticals (VRTX) suffered a significant decline the past 12 months (see the chart below), some price stability in the past three months suggests we can see a recovery in the weeks ahead.
In this daily chart of VRTX, above, we can see the August 2015 peak and the subsequent decline. In January of this year there is heavy turnover or volume of shares traded in a kind of wash out, or capitulation. This is the start of the bottom process. The On-Balance Volume (OBV) line has been flat the past three months, signaling that selling pressure has dried up. Prices have been trading above and below the 50-day moving average line. And we have a bullish divergence between the lower lows in price from January to March and the higher lows from the momentum study in the bottom panel. This tells us the rate of decline slowed into the base, just what chartists like to see.
This longer-term weekly chart of VRTX, above, gives us two positive technical clues. First is the $80 area, where prices have been holding is support from 2013 and second, in the bottom panel, there is a cover shorts buy signal from the MACD oscillator. A rally back towards $110 on VRTX could happen. Risk a close below $80 or $79.