Potential Double Bottom for Amarin Corp
AMARIN CORP PLC is an Irish-American biopharmaceutical company which is rapidly growing and the company focused on developing and commercializing therapeutics to cost-effectively improve cardiovascular.
There is a potential to develop a double bottom in the coming days, with roughly equal troughs established on this year March 5th and March 25th. This is an interesting formation to pay attention to and may present a good buying opportunity in the near future.
Figure 1 shows the daily candlestick chart. The double bottoms troughed at around $5.69 per share, with the peak between them making a $6.66. It is very significant to note that this pattern is not confirmed yet. The price action merely has the potential to develop into a double bottom. For the pattern to be confirmed, price must break above the peak ($6.66) between the two troughs. Until that happens, the double bottoms technically does not exist.
Figure 2 shows the volume action accompanying the price. Note that volume contracted during the decline into the second peak, and expanded on the subsequent advance. This is typical volume behaviour of confirming the reversal and gives greater conviction to the bullish outlook. For volume to continue confirming the pattern, it should expand during the breakout above $6.66.
If the price level does break above $6.66, and the double bottom is confirmed, the measured move price projection method can be used to predict the potential price targets. Using a 1:1 minimum price projection target in figure 3, the vertical distance between the peak and the troughs is copied exactly and projected upward from the breakout level ($6.66). The resulting target is around $7.63.
On the other hand, the price projection method can arguably use the vertical distance between the top of the candlestick wick instead of the top of the real body and the resulting target of this is around $8.91 shown in figure 4. Note that this target coincides with an area of prior resistance which gives it added credibility.