Crucell NV Turns Bullish

01/27/09 04:03:05 PM

by Chaitali Mohile

Crucell NV has established a strong support after a robust breakout.

Security: CRXL
Position: N/A

Crucell NV (CRXL) breached a neckline resistance of an inverse head & shoulders pattern. The 200-day moving average itself was the neckline resistance. The breakout brought the fresh bullish sentiments. After the breakout at $16, CRXL traveled almost $5 in one single day, followed by a gap-up opening. With this, the stock reached the target on inverse head & shoulders (16.64 - 9.42 = 7.22 + 16 (breakout) = 23.22). The full stochastic (14,3,3) formed higher lows at important bullish levels like 20, 50, and currently at 80. The 50-day moving average (MA) is ready to surge above the 200-day MA, indicating a bullish moving average crossover in Figure 1. The crossover suggested a bullish reversal signal and a strong support as well. The average directional movement index (ADX) (14) is indicating a highly overheated uptrend, which may turn down to moderate levels.

FIGURE 1: CRXL, DAILY. The flag & pennant continuation is being formed after the breakout of an inverted head & shoulders pattern.

Graphic provided by: StockCharts.com.

The breakout of a head & shoulders pattern has changed the picture for CRXL. The stochastic oscillator is moving flat. The price on the fast track, therefore, consolidated after hitting the target. The consolidation would accumulate the strength for a future rally. In Figure 1, we can see a bullish flag & pennant continuation pattern being formed. Under the bullish scenario, the pattern is likely to break soon. Traders and investors can buy CRXL on a confirmed breakout on high volume. The potential target will be 24 - 16 = 8 + the breakout level = target. I am reluctant to mention the breakout level currently, as the price has not moved decisively above the flag. Though the indicators are suggesting an upside breakout, I would like to wait for the confirmed breakout.

FIGURE 2: CRXL, WEEKLY. The stock has established support on a 200-day MA.

Graphic provided by: StockCharts.com.

In Figure 2, we can see that CRXL has been under the 50-day MA resistance since 2007. The stock followed the declining path of the 50-day MA. Finally, the rally that began from $10 converted the major resistance to support and sustained. An oversold stochastic (14,3,3) surged to an overbought territory. This helped price violate another strong resistance of the 200-day MA. Currently, CRXL is consolidating with the support of long-term moving average that is the 200-day MA. The ADX (14) in Figure 2 is indicating developing uptrend, and the stochastic (14,3,3) shows enough room for upside rally. Thus, CRXL is likely to hold the 200-day MA support in Figure 2. But if CRXL fails to sustain at 200-day MA, the next important support will be the 50-day MA.

Thus, the overall picture of CRXL has turned bullish after the breakout.

Chaitali Mohile

Active trader in the Indian stock markets since 2003 and a full-time writer. Trading is largely based upon technical analysis.

Company:	Independent
Address:	C1/3 Parth Indraprasth Towers. Vastrapur
	Ahmedabad, Guj 380015
E-mail address:	chaitalimohile@yahoo.co.in
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CHART ANALYSIS

Crucell NV Turns Bullish

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