(NOVN) – A Technical Look At Novan’s Stock Amid 80% Spike

Novan Inc. (NASDAQ: NOVN) shares are trading higher Friday after the company reported that B-SIMPLE4 pivotal Phase 3 trial of SB206 achieved significance for the primary endpoint with no adverse events.

The stock was trending throughout the day on StockTwits and was trading on higher than average volume. Novan was up 77% at $16.16 at last check.

See Also: Why Novan Shares Are Surging Today

Novan Daily Chart Analysis:

  • Shares have been falling in recent months, and now look to have broken out of what technical traders call a falling wedge pattern.
  • The stock gapped up above both the 50-day moving average (green), and the 200-day moving average (blue) Friday, indicating sentiment in the stock is likely turning bullish.
  • Each of these moving averages may hold as an area of support in the future.

Key Levels To Watch:

  • Novan formed into a falling wedge pattern and looked to break out of the pattern Friday on above-average volume.
  • This bullish reversal pattern forms as the stock has a steeper downward trend in the highs than it does with the lows forming a wedge on the chart.
  • As the stock is currently flying, the smartest play for traders may be to wait for some consolidation and to see if the stock can hold its gains before attempting to enter.

What’s Next?

Bullish technical traders would like to see the stock consolidate while holding some of its gains. A period of consolidation may let the stock see a further upwards push. Many times, stocks with good news will cool off after the news is released and then continue the run later.

Bearish technical traders would like to see the stock fall back to the wedge pattern. If the stock were to break below the support in the pattern, it may be prone to see a large dropoff.

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