My final breakout trading prospect is clinical-stage biopharmaceutical player Onconova Therapeutics ( ONTX), which is engaged in the discovery and development of small molecule product candidates for the treatment of cancer. This stock has been under pressure by the bears so far in 2013, with shares down by 26%.
If you look at the chart for Onconova Therapeutics, you'll notice that this stock recently reversed a major downtrend and entered a new uptrend, after the stock hit a new all-time low of $11.73 a share. During that uptrend, shares of ONTX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ONTX within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in ONTX if it manages to break out above some near-term overhead resistance levels at $15.40 to $16.91 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 218,953 shares. If that breakout triggers soon, then ONTX will set up to re-test or possibly take out its next major overhead resistance levels at $18.66 to its 50-day moving average of $19.25 a share. Any high-volume move above those levels will then give ONTX a chance to tag $22 to $23 a share.Traders can look to buy ONTX off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $13.50 a share, or just below $13 a share. One can also buy ONTX off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point. To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr. -- Written by Roberto Pedone in Delafield, Wis.
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