Although it can be seen on the daily chart of Verona Pharma PLC (:LON:VRP) that there has already been a significant recovery from the lowest levels of last year towards 1p, the current charting configurations does offer scope for further upside.
While it may be acknowledged that some traders are put off by the present overbought RSI indicator reading at 70+, the U-shaped recovery in place on the daily chart since the summer is a classic formation and one which statistically speaking can be regarded as reliable.
Indeed, the view at the moment is that while there is no end of day close back below the 10 day moving average at 1.95p / the latest bull flag formation, we could be treated to significant further gains towards the top of a rising trend channel in place since April last year.
This has its resistance line projection running as high as 3.5p, a target which could be hit as soon as the next 2 to 4 weeks. At this stage only sustained price action back below the former October 1.86p neckline resistance would be outright bearish on the bull argument here. This is especially the case given the way that the origins of the rally with a break above the still falling 200 a moving average last month are very robust indeed.
