Jazz Pharmaceuticals (JAZZ) Price Forecast: Multi-Year Base Signals Breakout Potential

Long-Term Base Emerges After Historic Advance

Shares of Jazz Pharmaceuticals plc (JAZZ) have been challenging resistance near the top of a multi-year peak of $194.73 from July 2015. Jazz Pharmaceuticals is a biopharmaceutical company focused on developing treatments for sleep disorders, oncology, and other specialty therapeutic areas. That high marked the top of a long-term basing pattern that has similar characteristics to an inverse head and shoulders pattern. The subsequent correction in JAZZ followed a greater than 37,000% rise in the price of the stock over approximately six years, highlighting the magnitude of the prior long-term advance. Note that the bull flag is clearest on the longer-term monthly timeframe.

“The Bigger the Base” Setup

The Wall Street adage “the bigger the base, the higher in space” comes to mind when looking at the chart for JAZZ. Price action suggests that the stock may be preparing to break out of this large base, with a recent attempt already underway. A successful breakout of the base could be the beginning of a new leg up in the long-term bull trend that originally produced the extraordinary advance leading into the 2015 peak.

Bull Flag Breakout Attempts Record High

An upside breakout of a bull flag triggered in late February, resulting in a base breakout attempt to a slightly higher record high of $198.00. The base breakout confirmed on a daily timeframe, with a close above the prior $194.73 high but not on a weekly basis. Both developments are signs of strength and may indicate preparation for another breakout attempt toward a new record high above $198.00.

Tightening Weekly Range

JAZZ has been pulling back since that new record high and established one inside week last week, while it is currently set to from a second inside week to complete this week. That would indicate tightening consolidation, which could result in a sharp move out of the weekly range. Currently, this week’s low is $179.31 and the high is $188.62.

Breakout Trigger and Upside Target

A decisive rise above this week’s high would provide the next sign of strength on the weekly timeframe. That could lead to a test of resistance at the $198.00 high and possibly a breakout above it. Such a move would signal a breakout of the long-term base pattern discussed earlier and provide further confirmation of strength from the bull flag breakout that triggered above $169.50.

An estimated initial target from the flag formation projects to approximately $254.20, reinforcing the bullish implications of a potential breakout form the multi-year base referenced at the beginning of this analysis.