AKBA Is Ready to Break Out

The AKBA weekly chart tells a very compelling story. It looks like AKBA has entered the final stages of a rounding bottom formation. The classical technical analysis describes a rounding bottom as a reversal pattern reflecting a gradual, progressive shift in the balance between selling pressure and buying demand over time. A basic characteristic of the pattern is the increasing volume at the end of the formation. That is what we see on the AKBA chart – a breakout through the interim resistance at 11 on rising volume. The pattern is not completed yet and requires a decisive breakout above 14. There is, usually, a price consolidation before a breakout. The Volume-by-Price on the left side of the chart shows 13 and 11 as potential support levels. These levels are expected to be the lower consolidation bounds. The width of the consolidation range depends on the future volatility.

According to Thomas Bulkowski, the failure rate of the pattern, if waited for an upside breakout, is only 5%. The average rise is 54%, which gives us a target at the next resistance level at 21.

My analysis of the price/volume structure on the volatility adjusted long-term P&F chart shows that AKBA is going through an accumulation phase since September 2015 with the increasing buying pressure. The size and duration of the ongoing accumulation suggest that AKBA has a potential to go to the target zone at 26-29 in the long-term. A failure to break above 14 and a decline below 10 will negate this scenario.

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