Medical device company Shockwave Medical (SWAV) reported better-than-expected quarterly numbers on Monday and seems to be the subject of takeover rumors. I have no first-hand knowledge of what may be happening in the boardroom(s) so let's check out the charts.
In the daily bar chart of SWAV, below, I can see a strong upward move from January. The shares are above the rising 50-day moving average line as well as the rising 200-day line. The 50-day line is close to crossing above the slower-to-react 200-day line for what is known as a golden cross. This is a mechanical buy signal that has decent results in a trending market.
The daily On-Balance-Volume (OBV) line tells me that buyers of SWAV are being more aggressive. The Moving Average Convergence Divergence (MACD) oscillator shows a short-term decline but is narrowing towards a new buy signal.
In the weekly Japanese candlestick chart of SWAV, I see a bullish setup. Prices are in a longer-term uptrend. SWAV trades above the rising 40-week moving average line. The candles in recent weeks show lower shadows and tell me that traders are rejecting the lows and the path of least resistance is up.
The weekly OBV line has powered higher in the past three months. The MACD oscillator is bullish.
In this daily Point and Figure chart of SWAV, below, I can see an upside price target in the $359 area.
In this weekly Point and Figure chart of SWAV, below, I can see that the shares have reached an upside price target in the $289 area but a trade at $324 will refresh the uptrend.
Bottom-line strategy: SWAV had an attractive chart before the takeover rumors. Traders could go long SWAV at current levels risking to $285. $359 is my price target for now.
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