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4D Pharma Shares Just Broke Below a Crucial Support Level. Will They Keep Falling?

Simon Mugo trader
Updated 21 Jul 2021

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4D Pharma logo

Shares of 4d Pharma PLC (LON: DDDD) just broke below the 87.6p support level I highlighted in previous articles, and many investors are wondering whether they shall keep falling.

Firstly, we have to look at the biotech company’s fundamentals and its bold decision to end the trials for its COVID-19 treatment as demand for a drug that cures the coronavirus diminishes in the face of effective vaccination campaigns.

The biotech company specialising in developing live biotherapeutic treatments based on the human microbiome has registered over 1000 patents on various drug formulations that could revolutionise the treatment of how human diseases.

Some of 4d Pharma’s drug candidates are in the final clinical trial stages, including its irritable bowel syndrome (IBS) drug that has demonstrated effectiveness in treating IBS-C and IBS-D.

While its fundamentals remain pretty solid, its technical paint a different picture as its shares have been falling since rallying to the 108p resistance level after announcing that it had ended its COVID-19 drug trials.

Since early July, sellers have been in control of the share price, leading to the break below the significant 87.6p support level, which has held since August 2020.

The latest breakout happened despite institutional investors such as Ursa Fund Management and Context Capital Management raising their stakes in the company.

4d Pharma shares were recently downgraded to a ‘sell’ from a ‘hold’ by analysts at Zacks Investments, while analysts at Chardan Capital and Ladenburg Thalm issued buy ratings.

From a technical standpoint, 4d Pharma shares could fall to the 75p level from which we could get a rally. The shares could also bounce back above the 87.6p level and rally higher. In the meantime, there is no viable trade setup on the stock.

*This is not investment advice.

4d Pharma share price.

IG chart of 4d Pharma share price 21-07-2021

4d Pharma shares are down 33.99% in 2021 and just broke below a significant support level. How far can they fall?

Should you invest in 4d Pharma shares?

4d Pharma shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are DDDD shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading