The reason I am bringing this up is because Viking Therapeutics Inc (NASDAQ:VKTX) stock broke out earlier this year, suggesting that an epic move toward higher prices was likely to follow.
In the late stages of a bull market, technical price patterns have a tendency to fail, trapping investors into trades that they perceived as bullish. As they scurry to exit the trade, a violent reaction toward lower prices tends to follow as a result. The reason I am bringing this up is because Viking Therapeutics Inc (NASDAQ:VKTX) stock broke out earlier this year, suggesting that an epic move toward higher prices was likely to follow.
I outlined this event on September 18, 2018, in a publication titled “This Will Act as the Trigger for the Next Big Move in VKTX Stock.” As the title suggested, a big move did follow, and the stock price tacked on 75.69% in the days following.
I am focusing on Viking Therapeutics stock once again because the turbulent markets have caused the VKTX stock price to correct. Viking Therapeutics stock is now approaching a key level of price support, and it needs to maintain its footing above it in order to maintain its bullish posturing.
Otherwise, it risks negating the signal that suggested that VKTX stock is poised for an epic move toward higher prices, and lower prices will likely follow as a result.
The signal I am referring to, which is suggesting that VKTX stock is poised for much higher prices, is captured on the following Viking Therapeutics stock chart.
Chart courtesy of StockCharts.com
This VKTX stock chart illustrates that a significant level of price support resides at $9.80.
This level of price support was the previous all-time closing high, established a handful of days after the stock began trading on a public exchange.
Right after this high was established, VKTX stock began a journey toward lower prices. This journey did not end until the share price suffered a decline that erased 91.4% of its value.
Once a bottom was finally established, Viking Therapeutics stock began staging an advance. It took 11 months for the stock price to recoup its losses, and on June 11, Viking Therapeutics stock finally sustained a close above this long-standing high.
This event, which is highlighted as a breakout on the chart above, is the indication currently suggesting that an epic move toward higher prices is in development. When a stock breaks above a long-standing high that was set shortly after inception, epic moves usually follow.
Shopify Inc (NYSE:SHOP) and Facebook, Inc. (NASDAQ:FB) are examples I like to point to because they both share this same characteristic. Once these stocks broke out, they went on a solid run toward higher stock prices.
As I mentioned, the implications of this event are still in play, which is why it is very important that VKTX stock maintains its footing above this level of price support. Failing to do so, on the other hand, would suggest that this setup has failed, and further losses would surely follow.
At this moment, even though the stock price has corrected, the trend remains bullish. It is offering another level of price support that is currently being tested. This level of price support is captured on the following Viking Therapeutics stock chart.
Chart courtesy of StockCharts.com
This VKTX stock chart focuses on the advance that began in July 2017, after the price put in a bottom at $0.88.
This advance has been characterized by the quintessential characteristic that defines all bullish trends, which is price action consisting of a series of higher highs and higher lows.
The uptrend line on the chart above was produced by connecting the series of higher lows. This uptrend line acts as a dividing line. As long as the stock price is pitched above it, I can only assume that a bull market is in development and that higher stock prices will prevail over time.
Breaking below the uptrend line would be the first indication that the move toward higher Viking Therapeutics prices has begun to stall. It would likely not be long after this that support at $9.80 is tested, which ultimately needs to hold.
Even though the market conditions are not favorable, I have no choice but to remain bullish on VKTX stock. The reason why is that Viking Therapeutics has not violated any levels of price support at this moment.
That being said, I am raising the caution flag because the stock is in danger of breaking below price support. If these levels do give way, I will not hesitate and will change my views appropriately.