After the announcement of a new antiviral pill to fight the symptoms of covid, Pfizer’s stock price rallied by 13% reaching $48.61 per share at closing. The big news came in during a solid uptrend and might be enough to send the stock’s price over its recent all-time high. As shown in figure 1, Pfizer’s stock has been moving mostly within some key parallel trendlines since May 2020 in a general upward direction.
Price action has been fluctuating within the channels highlighted and, in October, it bounced over the trendline that acted as support during the consolidation period that took place in May, June and July, to then continue with a decisive move to the upside. Volume action is looking bullish too: after a peak in August when the stock was reaching its highest price levels, volume has been slowly decreasing, reaching its lowest point precisely in conjunction with the reversal that happened in October. This is a sign momentum is clearly on the bulls’ side and that a solid price floor has been found. In November volume has picked up some pace again, as prices started to rise, especially after the news of the Paxlovid drug release.
New all-time highs are well within reach, but it is important to keep in mind that the RSI is reaching overbought levels at around 80% which, in the past, represented market peaks. The stock’s price has also closed, as the 6th of November, just below a relatively important trendline that has acted has a resistance level before.
Assuming the current uptrend is to continue, how far is the advance expected to go? Fibonacci analysis reveals an important price target in figure 2.
Taking a Fibonacci expansion of the uptrend from the low at A to the high at B highlights a 127.2% expansion target around $58.50. Then taking a Fibonacci extension pf the downswing from the high at B to the low at C shows the 161.8% extension coinciding very closely with the 127.2% expansion. This confluence of two Fibonacci targets is likely to act as strong resistance if tested by price.