GILD Stock: This Could Be a Big Problem for Gilead Sciences, Inc.

GILD Stock: This Could Be a Big Problem for Gilead Sciences, Inc.

GILD Stock: This Could Be a Big Problem for Gilead Sciences, Inc.

  • Gilead Sciences, Inc. (NASDAQ:GILD) stock is a heavyweight in the biotech space; the company bolsters a $105.0-billion market cap and ranks high among its competitors like GlaxoSmithKline plc(NYSE:GSK) and Pfizer Inc. (NYSE:PFE).
  • The biotech space has been known to make and break many hearts, and I am not talking about the millions of patients that are saved and treated by the medical breakthroughs that many of these companies have brought to market.
  • This sector is known to provide an investor with easy riches, and just as quickly take them away. The volatility is created by the weight that is placed on the news surrounding U.S. Food and Drug Administration (FDA) approvals and clinical trials

GILD Stock: Value Trap?

GILD Stock: This Could Be a Big Problem for Gilead Sciences, Inc.

A rounded top is a technical pattern that usually signals a trend reversal. It is common to see these patterns at the end of an uptrend. The longer in duration that it takes to complete the pattern, the more weight that is placed on its significance increases. This pattern could be signalling the beginning of a bear market for GILD stock. A surge in share price would negate this pattern, but until such an event presents itself, the pattern is bearish and worrisome.

In October 2015, GILD stock generated a “death cross.” A death cross is a bearish indicator that is produced when a faster 50-day moving average, highlighted in blue, crosses below a slower 200-day moving average, highlighted in red. Traders use moving average indicators to confirm a trend. This indicator is bearish and warrants stepping aside from long positions, or taking a short position. It is never wise to trade against this signal.

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It is not uncommon for patterns to be embedded within one another. So with the rounded top, another pattern has developed a falling wedge. This pattern is defined by two trend lines that are both trending downward. The resistance line has a steeper slope than the support line. This pattern can be viewed in a bullish tone. But in order for the pattern to resolve itself in that light, a break of resistance is needed.

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