Enanta Pharmaceuticals Inc. (ENTA) is using its chemistry-driven approach and drug discovery capabilities to become a leader in the discovery and development of small molecule drugs for the treatment of viral infections and liver diseases, according to the company's self-description. The price of its stock has been hit hard since November but it has been finding buying interest at a level of long-term support. Let's look.
In this daily bar chart of ENTA, below, we can see that prices have been more than cut in half in the past eight months. Prices made a low in May and so far a successful retest in June. Heavy trading volume in late May suggests a wash-out of weaker longs and purchase by stronger hands (deeper pockets). The On-Balance-Volume (OBV) line has been largely steady since November even as prices were cut in half. The May dip in the OBV line seems to be a temporary event. The Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in late May and is now just slightly below the zero line.
In this weekly Japanese candlestick chart of ENTA, below, we went back five years to see how important the $40 level has become. Prices have held that zone a number of times in the past and we are seeing it happen again. Trading volume has been increasing for the past year and has become heavy in May and June. Prices are trading below the 40-week moving average line. The weekly OBV line has held the same low since early 2021. The MACD oscillator is below the zero line but narrowing toward a possible cover shorts buy signal.
In this daily Point and Figure chart of ENTA, below, we can see a nearby price target in the $49 area.
In this weekly Point and Figure chart of ENTA, below, we see a $66 price target.
Bottom line strategy: ENTA made a low in May and a retest in June but more sideways trading is needed to broaden and develop the base for more sustained gains in the future. Stay tuned.
