Amarin (AMRN) Now Trades Above Golden Cross: Time to Buy?

From a technical perspective, Amarin Corporation PLC (AMRN) is looking like an interesting pick, as it just reached a key level of support. AMRN'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.

A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages being 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.

A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.

AMRN has rallied 25.2% over the past four weeks, and the company is a #2 (Buy) on the Zacks Rank at the moment. This combination indicates AMRN could be poised for a breakout.

The bullish case solidifies once investors consider AMRN's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 3 revisions higher in the past 60 days. The Zacks Consensus Estimate has increased too.

Investors should think about putting AMRN on 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