Shares of Open Orphan PLC (LON: ORPH) are up 50.7% in 2021 and have formed a double bottom price pattern, which is considered a bullish continuation pattern. Can the shares reach new highs?
Open Orphan has made several positive announcements in the recent past, including getting the High Court’s approval to reduce its share capital as it proceeds with plans to demerge some of its non-core assets and allocate shares to existing shareholders.
The biotech company has also fully transitioned into a specialist human challenge studies firm focused on COVID-19 challenge trials. The firm recently signed a £3 million contract with Imperial College London to develop a new SARS-CoV-2 challenge virus based on new emerging variants of the virus.
Open Orphan’s prospects are incredibly bullish. It has a first-mover advantage in the human challenge studies arena. It has reaped the benefits given the series of contracts it has won with private companies and government entities.
The company became profitable in Q4 2020 and is growing its revenues at a healthy rate given the multiple contracts signed this year.
From a technical standpoint, Open Orphan’s shares are likely to keep rising if the double bottom holds, and a positive fundamental trigger could fuel such a rally. As we now know, the technicals usually tend to front-run the fundamentals in most cases.
Bullish traders had an excellent opportunity to buy the shares when trading near the 32p support level in mid and late May, but it is not too late for long-term traders to jump in. Short-term traders may also open new positions but might have to use larger stop-loss orders than they would typically use, given that Open Orphan shares are trading way above the current support level.
The following price target would be the 48p April high. A reversal and break below the 32p support level would invalidate the bullish trade setup.
*This is not investment advice.
Open Orphan share price.
Open Orphan shares are up 50.7% in 2021 and have formed a double bottom pattern. What’s next?