We reviewed the charts and indicators of Mylan N.V. (MYL) last month, noting that, "MYL may retest its recent lows around $30. If that happens and prices hold it could represent a good location for aggressive traders to go long MYL risking a decline below $29."
Prices did pull back a couple of dollars after our last review and you may have been a buyer. We had no idea that prices would explode to the upside today. Wow! If you were not a buyer in the past two weeks but want to be a buyer I can understand. Nevertheless, a review of the charts is necessary to see what we want to do or recommend now.
In this daily bar chart of MYL, above, we can see the huge upside price gap made today. Prices jumped above both the declining 50-day average line and the 200-day moving average line. Prices have pushed more than halfway into the $37-$40 resistance zone from April to July. Pushing more than halfway through a resistance zone means you usually push all the way through.
The On-Balance-Volume (OBV) line has moved up to a new high to confirm the rally and the Moving Average Convergence Divergence (MACD) oscillator is nearly above the zero line for an outright go long signal.
The latest price action is not included on this weekly bar chart of MYL, above, but prices are above the falling 40-week moving average line. The weekly OBV line is pointed down but likely to rise fast. The Moving Average Convergence Divergence (MACD) oscillator is poised for a bullish crossover.
In this updated Point and Figure chart of MYL, above, we can see the straight-up move. The price consolidation of August and September yields a potential price target of $54.
Bottom line: Risk is harder to gauge than a price target after a gap like the one we have on MYL. Part of today's gap could be filled or prices might just continue higher. I would look to be a small buyer on a dip below $37 if available but note that I would not want to be a buyer of a decline below $36 as this might mean we could fill more of the gap.