AstraZeneca (AZN) has outlined an interesting chart pattern since May. Traders who are into chart patterns could look up a broadening pattern. This pattern is like a backwards triangle in that prices start with the apex and widen out from there. Broadening patterns can be top patterns and they can be continuation patterns. Let's look closer.
In this daily bar chart of AZN, below, we can see that prices made lower lows in July, September December. AZN also made higher highs in July, October and November. From the recent December low (point four) we should look for AZN to rally to a higher high in January or February for a point five.
The movement in the On-Balance-Volume (OBV) line the past year has been positive with just a slight dip since early November. The trend-following Moving Average Convergence Divergence (MACD) oscillator recently crossed to the upside for a cover shorts buy signal.
In this weekly Japanese candlestick chart of AZN, below, we can see the broadening pattern with the higher highs and the lower lows. AZN is now back above the rising 40-week moving average line.
The bigger picture of the OBV line is bullish and the MACD oscillator has begun to narrow towards a potential crossover.
In this daily Point and Figure chart of AZN, below, we can see a potential upside price target in the $65 area.
In this weekly Point and Figure chart of AZN, below, we used close only price data and a five box reversal filter. Here the software projects a target in the $123 area.
Bottom line strategy: Broadening patterns can be tricky to trade as they oscillate in a wider and wider pattern when we are more used to seeing patterns get tighter and tighter (like winding up a watch spring). Traders could go long AZN at current levels risking to $53. On the upside we look for new highs well above $64.
