Pulmonx Corporation (LUNG) Now Trades Above Golden Cross: Time to Buy?

After reaching an important support level, Pulmonx Corporation (LUNG) could be a good stock pick from a technical perspective. LUNG recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.

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.

There are three stages to a golden cross. First, there must be a downtrend in a stock's price that eventually bottoms out. Then, the stock's shorter moving average crosses over its longer moving average, triggering a positive trend reversal. The third stage is when a stock continues the upward momentum to higher prices.

A golden cross contrasts with a death cross, another widely-followed chart pattern that suggests bearish momentum could be on the horizon.

LUNG could be on the verge of a breakout after moving 100% higher over the last four weeks. Plus, the company is currently a #2 (Buy) on the Zacks Rank.

The bullish case solidifies once investors consider LUNG's positive earnings outlook. For the current quarter, no earnings estimate has been cut compared to 2 revisions 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 LUNG 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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