Key Takeaways
- Grail shares could remain in focus after surging to a new record high on Friday to cap off a huge week of gains amid optimism about the medical technology company’s early-detection cancer screening blood tests.
- After carving out a cup and handle-like pattern since June last year, the stock broke out above the formation’s neckline on Thursday, with gains continuing through Friday’s trading session.
- A measured move, which calculates the percentage change of the cup and handle’s “cup” and adds it to the pattern’s neckline, projects an upside target of $46.
- During pullbacks, investors should monitor key support levels on Grail’s chart around $23 and $20.
Grail (GRAL) shares could remain in focus after surging to a new record high on Friday to cap off a huge week of gains amid optimism about the medical technology company’s early-detection cancer screening blood tests.
The stock’s rally came after Oracle (ORCL) Chief Technology Officer and former CEO Larry Ellison said last Tuesday that early detection blood tests that detect DNA fragments can be leveraged with AI and gene sequencing to develop personalized cancer vaccines. Ellison made the comments at the White House after President Donald Trump announced a $500 billion AI infrastructure joint venture involving Oracle, OpenAI and SoftBank.
Shares of Grail, which was spun off from Illumina Health (ILMN) last June, gained 64% last week.
Below, we take a closer look at Grail’s chart and apply technical analysis to point out key price levels worth watching out for.
Cup and Handle Breakout
After carving out a cup and handle-like pattern since June, Grail shares broke out above the formation’s neckline on Thursday, with gains continuing through Friday’s trading session.
Importantly, the move occurred on the highest volume since mid-December, potentially setting the stage for follow-through buying.
Moreover, the relative strength index (RSI) confirms bullish price momentum, though the indicator registered an overbought reading on Friday, increasing the prospect for near-term profit taking.
Given the stock’s surge into blue sky territory, let’s turn to the chart to project a possible upside target and also identify key support levels worth monitoring during retracements.
Measured Move Upside Target
Investors can forecast an upside target by using the measured move technique, also known as the measuring principle, a method that analyzes chart patterns to predict future price movements.
When applying the analysis to Grail’s chart, we calculate the percentage change of the cup and handle’s “cup” and add it to the pattern’s neckline value. In this case, we apply a 100% increase to $23, which projects an upside target of $46, a region where investors could decide to lock in profits.
Key Support Levels to Monitor
During pullbacks, investors should initially keep a close eye on the $23 level. The shares would likely attract support in this area near the cup and handle pattern’s neckline, which may flip from a location of prior resistance into future support.
Finally, selling below this level could see Grail shares revisit support around the psychological $20 level. Investors may look for buying opportunities in this region near a trendline that connects several peaks and troughs on the chart stretching back to the July countertrend high.
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