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How to Trade Jazz Pharmaceuticals After Its Acquisition of GW Pharma

Jazz Pharmaceuticals will scoop up GW Pharma for $7.2 billion. The stock's been volatile since the news.

Jazz Pharmaceuticals  (JAZZ) - Get Jazz Pharmaceuticals plc Report has been all over the map on Wednesday following news that it will acquire GW Pharma  (GWPH) - Get GW Pharmaceuticals Plc Report for $7.2 billion.

Currently, shares are down about 0.5%. However, the stock was down as much as 7.2% at Wednesday’s low and up 6% at the session highs.

On the flip side, GW Pharma has jumped more than 46% on the day on the news. The move sent shares to all-time highs as well.

Wall Street still seems undecided on whether the deal is good news or bad news for Jazz, indicative by the up-and-down price and wide daily trading range.

Of course, GW Pharma bulls will likely argue that it was a good move by Jazz. Let’s look at the chart to see the key levels.

Trading Jazz Pharmaceuticals

Daily chart of Jazz stock.

Daily chart of Jazz stock.

Look at the daily trading range in Jazz stock today. It bounced between a number of key levels, retracement and moving averages.

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Specifically, it’s holding near the 50-day moving average and above the 100-day moving average. It’s also holding just above the 2020 pre-coronavirus resistance near $154.

How we do trade this big range?

From here, bulls will want to see the 100-day and 21-week moving averages hold as support.

To lose these marks will also put Jazz below Wednesday’s open and potentially put the session’s low in play near $146. Below that and $140 is possible.

On the upside, shares are struggling with the 50-day moving and are below the 10-week moving average. I would like to see the stock regain these marks, as well as $159.

North of $160 and perhaps shares can retest the 21-day moving average and Wednesday’s high near $167. Above that mark would put the $171 highs on the table, followed by a possible move to several upside extensions.

Remember, Wednesday’s action is volatile and a bit sloppy. Let Jazz stock show which direction has the strength and allow it prove itself above or below some of these key measures.

Below $150 is not good for bulls but above $160 is.