Shares of Xencor Could Be Bought on a 50% Correction

Traders should remain patient.

Xencor (XNCR)  , with its protein engineering platform, is "developing a broad pipeline of drug candidates that are optimized to treat patients with cancer and autoimmune disorders". Prices have been cut in half in recent months so this may spur some investors to check out the stock. Let's check out the charts.

In this daily bar chart of XNCR, below, we can see that prices quickly rebounded in June after a decline from early January. Prices zipped quickly above the declining 50-day moving average line and continued higher. XNCR is in "striking distance" of the 200-day line now. The trading volume increased on the rally and that is a positive.

The math-driven On-Balance-Volume (OBV) line has soared sharply from early June and tells us that buyers of XNCR have turned aggressive. The Moving Average Convergence Divergence (MACD) oscillator was bearish for much of the past year but has climbed above the zero line recently for an outright purchase signal. 

 

In this weekly Japanese candlestick chart of XNCR, below, we can see a bottom reversal pattern at the beginning of June - a bullish engulfing pattern. Prices have continued to rally for bullish confirmation of the reversal. XNCR is still below the declining 40-week moving average line.

 

The weekly OBV line shows the start of improvement in June and the MACD oscillator has crossed to the upside for a cover shorts buy signal.

 

 

In this daily Point and Figure chart of XNCR, below, we can see a potential upside price target in the $43 area.

 

In this weekly Point and Figure chart of XNCR, below, we can see that prices reached a downside price target in the $22 area.

 

Bottom line strategy: Traders should remain patient and look to buy XNCR on a retracement of the current rally to the $24 area for a 50% correction.

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