Cassava Sciences Stock Looks Ready To Break Out If This Pattern Is Confirmed

Cassava Sciences Inc. SAVA shares were moving Monday after the company announced positive clinical data with SavaDx.

SavaDx is an investigational diagnostic to detect Alzheimer's disease with a simple blood test. The stock was trending throughout the morning on social media sites such as StockTwits Monday.

Cassava Sciences was down 4.62% at $117.68 at last check.

Cassava Sciences Daily Chart Analysis

• Shares are trading in what technical traders would call a cup and handle pattern. The cup has been formed and now the stock looks to be forming the handle.
• The stock is trading above both the 50-day moving average (green), and the 200-day moving average, indicating the sentiment in the stock has been bullish.
• Each of these moving averages may hold as an area of support.

Key Cassava Sciences Levels To Watch

• The stock has formed the cup and is forming the handle in the pattern. If the stock can form the handle, the pattern may complete and the stock may move higher.
• This pattern happens when the stock makes a high and falls, then forms a cup shape back to the same high. Normally the stock doesn’t breakout the first time and dips, forming the handle of the pattern before the breakout.
• The Relative Strength Index (RSI) has been moving up the past week or so and now sits at 67. This is close to the overbought range that starts near at the 70 level on the indicator. More buyers have moved into the stock in the last week.

What’s Next For Cassava Sciences?

Bullish traders would like to see the handle in the pattern form and for the stock to breakout. If the stock can breakout, bulls would like to see the stock consolidate while holding gains for a potential further push.

Bearish traders would like to see the stock fall more and fall below the cup and handle pattern. This could mean the pattern is failing and the stock may see a downward push. Bears also want to see the stock fall below both of the moving averages for a potential change in sentiment.