Novavax Cracks Below Support: Are Things Getting Ugly?

Novavax Inc. NVAX shares are trading lower Wednesday following a report suggesting the company is facing issues with the purity of its COVID-19 vaccine candidate.

The company has been unable to consistently manufacture a shot that meets the quality standards. In a response to the report, Novavax said it's confident in its ability to deliver a high-quality vaccine. 

Novavax was down 10.38% at $143.88 at press time.

See Also: Novavax Shares Plunge To Lowest Levels Since Mid-May As COVID-19 Vaccine Woes Continue

Novavax Daily Chart Analysis

• Shares look to have broken below support in what technical traders call a pennant pattern.
• Price had been getting condensed between narrowing highs and lows for a time, but fell below pattern support before reaching the end of the pattern. If unable to cross back above the support, the stock could be ready to see a further push down.
• The stock is trading below both the 50-day moving average (green) and the 200-day moving average (blue), indicating sentiment in the stock looks to be turning bearish.
• Each of these moving averages may hold as a possible area of resistance in the future.
• The Relative Strength Index (RSI) has been falling lower the past few weeks and now sits at 29. The RSI has now entered into the oversold region and is now seeing much more selling pressure than buying pressure.

What’s Next For Novavax?

Bullish traders are looking to see the stock bounce back and move above pattern support once again. Bulls would then like to see the stock continue to trade in the pattern for a time and break out above resistance.

Bearish traders would like to see the stock continue to hold below the support line and continue to drop lower. Bears look to be in control of the stock at the moment and would like to keep it that way.