MDCO - Stochastic Divergence Using Multiple Time Frames

The Medicines Company broke out in a big way last month on heavy volume , sending prices up 40% from the lows. It has held on well over the last few weeks and pulled back 15% on a back test of support.

On the left is the weekly chart. The stochastic 9,3 is a textbook divergence that is playing out and still has some upside. For a longer term swing trade you can use the Fibonacci levels. .236 as an entry with .382 - .618 as profit targets.

The daily chart on the right gives a better look at the recent price action as it pulled back to test new support. The stochastic 9,3 has pulled back and is making the turn back up. This is a high percentage area for a bounce, especially because we have the longer term weekly divergence signal on our side. This gives the daily chart a significantly bullish bias.

As always, we want to get in on the way up.

Buy: 32.00
Target: 33.00 - 34.00 (3.13% - 6.25%)
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