After Golden Cross, DiaMedica Therapeutics, Inc. (DMAC)'s Technical Outlook is Bright

DiaMedica Therapeutics, Inc. (DMAC) is looking like an interesting pick from a technical perspective, as the company reached a key level of support. Recently, DMAC's 50-day simple moving average crossed above its 200-day simple moving average, known as a "golden cross."

Considered an important signifier for a bullish breakout, a golden cross is a technical chart pattern that's formed when a stock's short-term moving average breaks above a longer-term moving average; the most common crossover involves the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.

Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb to higher prices.

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

Over the past four weeks, DMAC has gained 56.3%. The company currently sits at a #2 (Buy) on the Zacks Rank, also indicating that the stock could be poised for a breakout.

The bullish case solidifies once investors consider DMAC'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.

Given this move in earnings estimates and the positive technical factor, investors may want to keep their eye on DMAC for more gains in the near future.

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

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