Shares of Amarin Corporation plc (AMRN), a pharmaceutical company focused on heart diseases, are up more than 500% in the past 10 months. This major move is setting up for the stock to remain volatile in the coming weeks, and that means there will be great trading opportunities on this stock.

Since shares spiked last September after the company announced positive results for trial tests, the stock has largely stagnated. Amarin stock is trading at the same price level where it was two weeks after that announcement.

With the price consolidating for the past 10 months, it has created a classic stock market pattern – an ascending triangle pattern. This gives us clear support and resistance levels to trade on. Take a look:

Chart showing an ascending triangle formation on the chart of Amarin Corporation plc (AMRN)
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Once the price breaks one of these levels, we can expect a move of $13 per share, or more than 70% of the stock's current price. It won't be another 500% rally, but the stock is setting up for another massive move. This time though, it could be a collapse.

In fact, this pharmaceutical stock has seen its share of ups and downs driven by news. Take a look at a few of the pops and drops that have happened before.

Here’s one from 2010 to 2013, when prices surged more than 1,000% before crashing:

Chart showing gains followed by a steep decline on the chart of Amarin Corporation plc (AMRN)
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This one is from 2001 to 2002, when shares of Amarin jumped over 300% and then came tumbling back down:

Chart showing gains followed by a steep decline on the chart of Amarin Corporation plc (AMRN)
Optuma

Today’s chart shows a similar surge higher and is now consolidating and waiting for the next major move. The ascending triangle pattern is typically a continuation pattern, meaning this chart pattern is telling us to expect the breakout to the upside, which would send shares up more than 70%.

We can use the key levels in the chart to know which way the breakout is occurring. If the stock breaks below the green support level, then prices may be set up to collapse like the other charts. But as long as that support level holds, the smart money will stay on the breakout to the upside.

The Bottom Line

Amarin is a stock known for its pops and drops. This time may be different, but we have the ascending triangle pattern to guide us. We can expect the stock to jump $13 per share from its current price, which would equate to a move of more than 70%.