Opko Health (OPK) is a small-cap pharmaceutical company that's showing traders constructive price action right now. After rallying hard at the start of December, shares have spent the last few weeks consolidating sideways in a symmetrical triangle pattern. With shares up around 53% in the last three months, this setup points to another rally leg along the way for OPK shareholders.
The symmetrical triangle is a continuation pattern that typically splits rallies, giving stocks a chance to bleed off some overbought momentum before moving higher again. For that reason, traders often think it of as a "half-mast pattern." You want to trade the triangle in the direction of the breakout; in other words, if shares push through the trendline resistance level, then you want to be a buyer. But if they fall through support, we've got a sell signal.
Momentum adds some extra confidence to this trade. 14-day RSI has been able to maintain its uptrend from the start of last fall. Since momentum is a leading indicator of price, that supports another rally leg in OPK.Don't try to predict that, though. Wait for the breakout to happen before you put your money on the line.
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