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Teva Technical Analysis
We have decided to cover one of the greatest pharmaceutical companies battle in the market. Teva, an international pharmaceutical company is attempting to take over Mylan, another pharmaceutical giant. The battle has been taking place for the past several months as Mylan rejects Teva’s proposal to buy the firm. Teva began purchasing Mylan’s stocks in the masses, reaching 4.61% of the Mylan’s stocks, which allows Teva by Dutch law to commence a takeover as Mylan is registered in the Netherlands. The battle between the companies has attracted our attention.
Teva Weekly Chart (US Market)
Please click on the chart to enlarge:
One can easily note the uptrend that has been developing in Teva weekly chart. As the third wave has been established there is a fair risk to a moderate retracement. The black lines indicate the possible upcoming trend for the stock. The price has encountered a strong support at 58.49 that may suggest the bottom of the retracement since April 2015 high. Although the 58.49 could be re-tested by the market, the price appears to be ripe for corrective gains. The technical question is what would be the strength of the next tick higher?
The initial target is likely to be 62.24 where a firm resistance is noted. A break above 62.24 may clear the path for stronger gains towards 64.20 (approx.), which would be the upper black line. We cannot ruleout the formation of the 4th wave that will drive above 68.82 but it is not anticipated at the time of this writing. We believe the corrective gains will be in a single candlestick, a spike if you would like due to news on Teva-Mylan acquisition. A break below 58.49 may lead to further losses towards 55.26 where the next firm support lies.
Why Teva Wants Mylan?
We can only speculate on this but in our views and understanding of the pharmaceutical world it is all about the Copaxone. Teva’s patent on the Copaxone has been recently invalidates in US courts following a long battle. The Copaxone is used to treat Multiple Sclerosis (MS) and is accounting for more than 50% of Teva’s operating profits. If Teva acquires Mylan it will benefit from the generic version of the Copaxone, which will enhance its profit. Although Teva weekly chart does not seem promising at the time of this writing the possibility for a 4th bullish wave is not negated.
To conclude out outlook for Teva Pharmaceutical Industries Ltd a the stock appears to be more bullish than bearish where the current dip may attract the attention of many investors. We are however uncertain whether the forthcoming gains will be temporary or will push the price above its high, 68.82.
30/06/15 UPDATE: Despite the sharp losses in US markets following the latest developments in Greece, Teva has re-tested 58.49 and retraced higher.
Click on the chart to enlarge:
04/07/15 UPDATE: TEVA extended its gains in US markets as anticipated.
Please click on the chart to enlarge:MEMBERSHIP PLANS MARKET EDUCATION MORE RESEARCH