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5 Stocks Setting Up to Break Out

Stocks in this article: VVUS HZNP DNDN BCEI TRIP

Horizon Pharma

One stock in the biotechnology and drugs complex that's starting to flirt with a major breakout trade is Horizon Pharma (HZNP - Get Report), which develops and commercializes medicines to target unmet therapeutic needs in arthritis, pain and inflammatory diseases. This stock hasn't done much in 2012, with shares virtually flat on the year.

If you look at the chart for Horizon Pharma, you'll notice that this stock was stock in a nasty downtrend from its November high of $8.98 to a recent low of $3.05 a share. During that downtrend, shares of HZNP consistently made lower highs and lower lows, which is bearish price action. That said, the stock has now started to trend sideways for the past month, and it's been making higher lows and higher highs, which could be indicating the start of a bullish trend change.

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Traders should continue to look for long biased trades in HZNP if this stock can manage to stay above its 50-day moving average of $3.70, and if it can trigger a near-term breakout above $4.10 a share with volume. Look for volume on that move that's near or well above its three-month average action of 58,115 shares. At last check, volume today is big with over 475,000 shares traded and HZNP has hit a daily high of $4.21.

As long as HZNP is trending above $4.10 with strong upside volume flows, then this stock should setup to trade back towards its next significant overhead resistance levels at $4.50 to $5.40 a share. Since the upside volume was strong yesterday and is today, then the probably if this stock spike big is high on a close over $4.10 and near its daily highs.

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