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
Shares of biotech company Synairgen plc (LON: SNG) are trading almost flat for the year but have formed a triangle pattern that could lead to a breakout in either direction, creating excellent trading opportunities.
It is always hard to predict how a share will break out o a triangle pattern, especially an equilibrium triangle such as the one shown in the chart below. Therefore, investors have to wait for the price to break out before opening new positions.
However, we can study the company’s fundamentals to determine if we are likely to get some positive or negative news in future that could trigger a breakout aligned with the news. Adverse events are likely to fuel a bearish breakout, while positive news is likely to result in a bullish breakout.
The company is expected to release the data from the phase 2 home clinal trials of its inhaled interferon beta drug (SNG001) as a treatment for COVID-19 during Q2. Many are patiently awaiting the report.
If the phase II trial is successful, we will likely get a surge in Synairgen’s share price after the UK health regulators allow the drug to proceed to phase III trials. This trial’s success will help keep most COVID-19 patients out of hospitals as they will be treated and recover from the comfort of their homes.
Synairgen is simultaneously running phase II clinical trials of its SNG001 drug to treat chronic obstructive pulmonary disease (COPD), a prevalent disease among smokers with a very high mortality rate.
An experienced team of researchers has led the firm since being was spun off from the University of Southampton.
Traders looking to open new positions in the firm should know that the fundamentals favour a bullish breakout. However, triangle patterns are very unpredictable and could break out in either direction, which is why risk management is essential.*
*This is not investment advice.
Synairgen share price.
Synairgen shares are trading almost flat this year but have formed a triangle pattern that could break out at any moment.
Synairgen 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 Synairgen shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies
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