NEW YORK ( Real Money) -- Shares of pharmaceutical company MannKind (MNKD) - Get Report fell 7% on Tuesday after Goldman Sachs downgraded the stock to sell and set a price target of $3.

The shares closed at $6.16, down 48 cents.

The stock went parabolic in late January launching from the low $5s to nearly $8, an increase of almost 50%. Now, Goldman believes the stock is only worth less than half of Monday's closing price of $6.64.

The downgrade is aggressive, considering that it came only a few weeks after sales for MannKind's diabetes drug began. This is a time when I'll look at the charts, as I think they provide a glimpse of the psychology of the market, and where we might find buyers and sellers in the near term until more fundamentals are available for review and decision-making. And by fundamentals, I'm talking about pipelines, subscriptions, sales, pricing of the drug, not just the book value or price-to-earnings ratio

MannKind spent the winter in a very wide consolidation channel before pushing higher in early 2015. I'm not a huge user of Fibonacci levels on charts as I tend to use them in my underlying indicators, but I think they are helpful, especially when looking at a stock that runs 30% to 50% or more in a very short time frame.

In this instance, I am using the bottom tick in October and top tick in February to arrive at levels. The stock has actually done a fine job trading around these levels, closing on Monday at around the 61.8% area and then touching 38.2% as the low on the day.

With the stock bouncing off the lows, the $6.16 to $6.25 range becomes key. A close above $6.25 and the bulls should fill the gap easily. A close below $6.16 and we have to retest the maroon area of $5 to $5.25, which I see as major price support.

The short-term damage looks big on Tuesday as we now have only $5.75 as support with the next level 10% lower. Furthermore, we are not yet in oversold territory. If I'm playing this one now, it is only for a scalp in either direction, but unless it gets back over $6.25, I would be very cautious in the near term if I were a bull.

The weekly chart provides more data to consider. First, the slightly longer-term vortex indicator says the bullish trend sentiment isn't quite dead yet. There are concerns, though, as the Relative Strength Index is crossing under 50, and I used a 13-period, rather than an eight-period, range to get a better feel for long-term direction. I also pushed out the slow stochastics a bit, and they are starting to turn bearish.

It makes sense when you look at price. That winter consolidation and bounce formed a nice price channel. We are now at the very bottom of the channel (support), and so I am really keying on this RSI and stochastics. It is very possible they are leading the breakdown in price. Support, unfortunately, doesn't come in until $4.50, and then $3.80. If we did see those levels, I would look at this as a very attractive risk-reward.

I did note the bearish head-and-shoulders pattern . Obviously, you can't use the head minus the neckline and then subtract that from the neckline or you get a negative value. Rather, I would take the difference between the head and neckline ($11.50-$4.50) and then divide the head ($11.50) by the result ($7). I would then take this percent value and multiply it by the neckline of $4.50 to give me my target of $2.75.

Surprisingly, it maps very well to the Goldman target. In other words, a close below $4.50 on a weekly chart will bring about Goldman's $3 price target.

Overall, there are major concerns based on the charts. MannKind needs to get back above $6.25 on the daily chart to shake off weakness and get back in the channel on the weekly chart. A close on a weekly basis above $7 will eliminate that head-and-shoulders pattern as well.'

Again, I believe Goldman's downgrade is aggressive, but Tuesday's price action has potentially damaged the charts enough for folks to start buying into it, and so I would wait for a few of the warning signs to clear before aggressively adding this one.

Editor's Note: This article was originally published at 12:30 p.m. EST on Real Money on March 3.

At the time of publication, Collins had no positions in the stock mentioned.