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Is Northwest Biotherapeutics Set to Surge?

Northwest Biotherapeutics may be on the verge of a major move to the upside. Price action in the stock has been tracing out bullish pennant which saw a significant breakout on the 11th of this month. This is an intrinsically bullish formation which may present a good buying opportunity in the long term.

Figure 1

Figure 1 shows the candlestick chart of Northwest Biotherapeutics. The short rapid thrust in price from 31st of August 2020 to the 21st of October 2020 acts as the flagpole for the pattern and is represented via the solid blue coloured line in figure 1. It is then followed by a consolidation which takes the shape of a triangle. The formation is now complete and no breakout is required for pattern completion. A closer look at the volume action accompanying price on figure 1 further indicates an upward trend. In the initial thrust in price the volume increased significantly. However, throughout the development of the triangle, volume contracted significantly. This is typical volume behaviour for a bullish pennant, and gives greater conviction that we will see a strong bullish move imminently. To continue confirming the pattern, volume should continue to rise as price climbs.

Figure 2

How high will the stock rally? Using the conventional price targeting method for bullish pennants, a 1:1 equality projection target is shown in figure 2. The vertical height of the base of the triangle is copied exactly, and projected upwards from the point of breakout. The black coloured arrow on figure 2 represents the price target from when breakout occurred on the 11th of March (1.4291 USD). In this case the 1:1 price target would be 2.9224 USD as shown on Figure 2.

With the confirmation of the bullish pennant and the breakout, the upward moves for Northwest Biotherapeutics seems very likely and it is very possible the 1:1 target may occur in the next coming months. However, it should be noted that regardless of the pattern being confirmed it may still fail. If the pattern starts to drop after the breakout and eventually drops below the upward sloping trend line, the bullish pennant will be considered to have failed. This would mean any bullish sentiment on the basis of this pattern would no longer stand. This is definitely an interesting stock to watch in the coming months.

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