Teva Technical Trade Alert
Teva Pharmaceuticals Industries Ltd, the biggest generic drug manufacturer at the time of this writing may be in front of a major trend reversal.
By studying the monthly chart via technical analysis, one may easily note the downtrend began from the top Head-And-Shoulders (H&S) in 2009. As the neckline was breached, the key support (measured from 2001) was violated by the market bears, taking down the price to 34.97 before giving room for a technical correction. As the re-tests of the latter support failed to post new lows, the price has continued its bullish momentum. In April 2014 we have witnessed a re-test of the key support (now acting as a major resistance) but bargain hunters picked up the price off its low’s to current levels.
Teva Monthly Chart
There is a mutated reversed H&S on the monthly chart but due to the strength of the resistance we are entertaining the possibility of a major reversal. If the top H&S has yet to fulfil its 100% objection the stock may trade as low as $13 by 2017. We cannot predetermine such observations as the price requires to take out $34 in order to confirm such possibility. Nevertheless, we believe current levels provide a decent entry for shorting the stock despite the strong opening.
We expect $57 to prevent further gains in the stock and it is our key resistance for the technical trade. We will continue to monitor Teva Pharmaceuticals Industries Ltd and update the trade in this post.
Teva Trade Details
TEVA short @ market price ( 53.81)
Take Profit: 43.50
Protective stop: 58.50
Estimated duration: 80 days
Risk Ratio (RR): 1:3 (approx.)
Please ensure you have read our risk disclaimer.
16/07/14 UPDATE: We are maintaining our bearish outlook for Teva and will continue to monitor the US markets.
17/07/14 UPDATE: TEVA gapped lower, assuring our short trade is in a fair profit at the time of this writing. Current price: 53.30.
04/08/14 UPDATE: TEVA is trading at 52.99 at the time of this writing. We are liquidating 20% of the open trade at market price.
08/08/14 UPDATE: TEVA is trading at 51.01 at the time of this writing. We are closing 35% of the trade at market price and shift our protective stop to the entry.
13/08/14 UPDATE: TEVA is trading at 50.97 at the time of this writing. We are shifting our protective stop to 52.96 and closing 10% of the short trade at market price.
26/08/14 UPDATE: With a slight delay, TEVA triggered our protective stop after shifting it above the entry. We have booked a decent profit over the trade (approximately 5.00% decline from our entry).