After one of its largest percentage moves that the pharmaceutical sector has ever made back in November 2016, the sector has proverbially been “stuck in the mud” and has gone relatively nowhere since its largest percentage move ever. Even high-flyer Tesaro (TSRO) has seen some selling pressure after making its huge run-up. Tesaro (TSRO) is a company that is categorized into the pharmaceutical sector.

In my last full-length article for Tesaro (TSRO), I anticipated TSRO’s share price to continue its ascent but mentioned downside risk to the $143 area. The previous article can be quickly accessed here “3/11/2017 – Tesaro (TSRO) Stock Chart Review“.

Tesaro (TSRO) – Fibonacci Retracement Tool

This first chart is a 2 year weekly chart for Tesaro (TSRO). I’ve placed a Fibonacci Retracement Tool on its entire uptrend that precedes its current downtrend. The main use for Fibonacci Retracement Tools is to calculate support areas after a stock’s share price starts to consolidate or correct.

Based on the length of the current downtrend, I anticipate that TSRO’s uptrend was complete (it completed a Bullish Impulse wave pattern). Because of that, the Fibonacci Retracement Tool was placed on the entire uptrend and not just the most recent portion of it.

The minimum 38.2% retracement of TSRO’s uptrend has been made. The 50% retracement area at the $111.23 price level is what I would consider[s2If !current_user_can(access_s2member_level1)]……

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If you are not a Trendy Stock Charts member, consider joining today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)] to be TSRO’s maximum downside risk area. This area also has the support from the Rising Window candlestick pattern (gap-up).

While reaching the maximum downside risk area wouldn’t be fun if you currently hold shares of TSRO, it would represent the statically probable best prices to re-purchase shares or to purchase additional shares for TSRO’s next uptrend.

TSRO – Monthly Candlestick Review

This next chart for Tesaro (TSRO) is a 5 year monthly chart to analyze any potential change in its long-term trend. Long-term buying momentum according to the MACD Histogram is slowing down.

The 3 White Soldier candlestick pattern provides a definite support area on the first re-test. Trendy Stock Charts members can review details regarding the support area for a 3 White Soldier candlestick pattern here.

Based on the 3 White Soldiers candlestick page, the support area is calculated to be $100.24 – $121.44, quite a wide swath of support.

In order to effectively monitor the best scale-in purchase during any potential further pullback, a shorter-term chart like a daily candlestick chart should be used. Watch for any sort of bullish reversal candlestick patterns that develop in the support range identified for the 3 White Soldiers candlestick pattern.

TSRO – Moving Averages

This last chart is a 1 year daily candlestick chart to look at Tesoro’s price action from a moving average perspective. TSRO’s share price action developed into a bullish reversal candlestick pattern on June 9, 2017.

The price action on June 9, 2017 ended up creating a Hammer candlestick pattern. The Hammer candlestick pattern was confirmed with increased volume as compared to the previous candlestick’s volume. Learn more about Hammer candlestick patterns.

A Hammer candlestick pattern that was confirmed with volume is a nice combination to look for a reversal in the trend. Add to that the primary support area for the Hammer candlestick pattern sits right on the 200 Day moving average. The combination of these bullish indicators seem to be indicating a reversal of trend back to an uptrend.

TSRO’s share price has completed a minimum 38.2% retracement of its previous uptrend. Is a 50% retracement in its future?

Tesaro (TSRO) – Summary

If TSRO’s share price did indeed reverse from a downtrend back into an uptrend, its share price should not break back below the 200 Day moving average. If it does, wait until TSRO’s share price reaches the secondary support area from the Hammer candlestick pattern to make a scale-in purchase to re-purchase shares or to begin a position in the stock.

TSRO’s share price has seen nice buying volume the last couple of days after its rebound from the 200 Day moving average. But based on the Fibonacci Retracement Tool on the above weekly chart, do not be surprised is TSRO breaks below the 200 Day moving average for a short time period and re-tests the Rising Window candlestick pattern’s support area. That would also represent a 50% retracement of its previous uptrend, the maximum amount of retracement I would anticipate for TSRO’s previous uptrend.

A break below the 200 Day moving average and back towards the support area from the Rising Window candlestick pattern would represent an opportunity to make the largest portion of your scale-in purchases. In order to accomplish that, consider trimming any shares bought around the $143 price level at $160 or above during any uptrend that precedes this last possible pullback.

Good luck trading and please ask away with any questions!!

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