Novocure Breaks a Major Support Zone: What Now?

Here's what smashing what was a zone of support means for the stock.

Novocure Ltd. (NVCR) plunged sharply lower this week after the company announced data for its Tumor Treating Fields (TTFields) therapy in treating non-small cell lung cancer (NSCLC). The shares were holding the $60-$55 area for many months but that area of support or buying interest was broken.

What do the charts and indicators suggest now?

In the daily bar chart of NVCR, below, I can see that the shares bounced off the $60-$55 area a number of times in the past 12 months. Every bounce or rebound failed and prices returned to that same area. Earlier this week the shares dropped from around $75 to below $50 -- smashing what was a zone of support. Prices are below the 50-day and the 200-day moving average lines.

The On-Balance-Volume (OBV) line shows a slight rise the past year. Trading volume this week has been very heavy as traders voted with their feet. The Moving Average Convergence Divergence (MACD) oscillator has moved below the zero line for an outright sell signal.

 

In the weekly Japanese candlestick chart of NVCR, below, I can see how the $60 level has held since early 2022. This zone of support is now likely to turn into a zone of resistance as traders who may have gone long at $60 will want to "get even" if prices get back to that area.

 

The weekly OBV line has turned south and the MACD oscillator is bearish.

 

 

In this daily Point and Figure chart of NVCR, below, I can see that prices have reached and exceeded a downside price target in the $59 area.

 

 

In this weekly Point and Figure chart of NVCR, below, the software is projecting a downside price target in the $3-$2 area. Ouch.

 

 

Bottom-line strategy: Traders should avoid the long side of NVCR.

 

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