This Is Why GERN Stock Is Poised for Further Gains – Profit Confidential

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GERN Stock: Bullish on Multiple Time Frames

I have been using technical analysis to analyze the merits of investments for two decades. I found out early in my career that the most common mistake analysts make when using technical analysis is that they put too much emphasis on one time frame.

This can be problematic because one time frame may seem bullish but other time frames may not align. If that is the case, then the signal that was generated is not pertinent and should be avoided. A stock needs to bullish in all time frames in order to justify taking a position.

In order to illustrate this concept, I am focusing on Geron Corporation (NASDAQ:GERN). I believe that Geron stock is poised to continue its trend toward higher GERN stock prices because it has generated a number of signals on many time frames that support such an outcome.

For example, the following one-hour Geron stock chart has generated a signal that is currently suggesting that higher stock prices are now on the horizon.

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Chart courtesy of StockCharts.com

The signal generated on the GERN stock chart is a completed technical price pattern known as a cup and handle price pattern.

Cup and handle price patterns are created when a significant level of price resistance prevents the stock price from advancing beyond it. This inability to advance results in the creation of two distinct troughs, where the first trough is larger than the second. These troughs characterize the cup and handle price pattern.

On August 31, GERN stock broke above price resistance, which resided at $5.65, completing the cup and handle price pattern. This completed pattern is now suggesting that Geron stock is poised for further gains.

The completed cup and handle price pattern was completed on the heels of a larger technical price pattern, which is highlighted on the following GERN stock chart that uses a daily scale.

Chart courtesy of StockCharts.com

The completed technical price pattern highlighted on this Geron stock chart is a descending triangle.

Descending triangle price patterns are created when the price action is characterized by a sequence of lower highs and a static low.

Connecting the peaks and troughs created by this price action is how I captured the price pattern. The end result is two converging trend lines that depict a triangle.

These trend lines pinpoint where significant levels of price support and price resistance reside. In order to complete the pattern, Geron stock needed to exit the pattern by either breaking above resistance or falling below support.

This is exactly what occurred on August 7, when GERN stock broke above price resistance, completing the descending triangle. This completed pattern correctly suggested that higher prices were likely to follow. The 46.92% return since that date is a testament to that notion.

Both the completed price patterns I have already highlighted are integral pieces of a larger wave structure. This wave structure is highlighted on the following GERN stock chart using a weekly scale.

Chart courtesy of StockCharts.com

This GERN stock chart highlights a wave structure and an influential momentum indicator that are known to create and sustain bullish trends.

The wave structure consists of impulse waves and consolidation waves.

The impulse waves are highlighted in green. They capture the period in a bullish trend when a stock makes a sustained move toward higher prices.

The consolidation waves are highlighted in purple. They capture the period in a bullish trend when a stock corrects and refrains from advancing.

The descending triangle doubles as a consolidation wave. Its completion implies that a sustained move toward higher GERN stock prices is now in development.

This notion that a sustained move toward higher Geron stock prices is in development is being reinforced by a bullish moving average convergence/divergence (MACD) signal.

MACD is a momentum indicator that determines whether bullish or bearish momentum is influencing the price action in a stock. Bullish momentum implies that a stock is likely to appreciate, while bearish momentum implies that a stock is likely to depreciate.

Momentum is such an influential force that a stock cannot sustain a move in either an upward or downward direction unless the applicable level of momentum is supporting it. This is why the waves within the wave structure have coincided with the signals created by the MACD indicator.

For example, in September 2017, a bullish MACD cross was generated, which coincided with the development of an impulse wave. In June 2018, a bearish cross confirmed that a consolidation wave was in development.

Shortly after the consolidation wave was completed, a bullish MACD signal was generated, confirming that a sustained move toward higher GERN stock prices was now in the works.

This notion of a sustained move toward higher Geron stock prices will remain intact as long as the MACD indicator remains in bullish alignment. Given that this signal was just generated, it implies that the impulse wave has just begun its development.

Analyst Take

I am bullish on Geron stock because it has generated bullish signals using the one-hour, daily, and weekly time frames. These bullish signals are suggesting and reinforcing the prospects that a move toward higher GERN stock prices is now in development.

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