FGEN recently hit the measured target from Double-Bottom pattern breakout around 20.74 (note that the Double-Bottom pattern formed up with a Bullish Divergence pattern on RSI which makes a strong case of a high probability trade entry).
FGEN is now approaching the resistance zone around 21~22 which is around 50% retracement from the recent peak (or 38.2% retracement from October 2015 peak). The 21.1 resistance is also the previous support prior to breakdown. These convergence of resistance levels is a potential short term profit taking area for short term positions.
Bullish Scenario:
- The breakout from 4-months downtrend line supported by above average volume is also a potential breakout play. Measured target is near 25.
Trading Plan
- If trading the Double-Bottom breakout, take some profit like 50% of the position and profit run the rest with trailing-stop.
- The resistance zone shown in the chart is also a potential short term target to take profit. Scale-down short term position and profit run the rest.
- If trading the breakout from 4-month downtrend line, buy near the breakout area with stop-loss around the double-bottom breakout resistance level (around 19). Set TP near 25 for a risk/reward ratio of at least 1:2.
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