Rigel Pharmaceuticals (RIGL) Just Flashed Golden Cross Signal: Do You Buy?

From a technical perspective, Rigel Pharmaceuticals, Inc. (RIGL) is looking like an interesting pick, as it just reached a key level of support. RIGL's 50-day simple moving average crossed above its 200-day simple moving average, which is known as a "golden cross" in the trading world.

There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving average. Typically, a golden cross involves the 50-day and the 200-day moving averages, since bigger time periods tend to form stronger breakouts.

A successful golden cross event has three stages. It first begins when a stock's price on the decline bottoms out. Then, its shorter moving average crosses above its longer moving average, triggering a positive trend reversal. The third and final phase occurs when the stock maintains its upward momentum.

This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.

Shares of RIGL have been moving higher over the past four weeks, up 56.6%. Plus, the company is currently a #2 (Buy) on the Zacks Rank, suggesting that RIGL could be poised for a breakout.

The bullish case solidifies once investors consider RIGL's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 1 revision higher in the past 60 days. The Zacks Consensus Estimate has increased too.

Investors should think about putting RIGLon their watchlist given the ultra-important technical indicator and positive move in earnings estimates.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research