Insys Therapeutics, Inc. (INSY) shares soared nearly 20% on Tuesday, which adds on to the stock's dramatic 118% rise over the past month. The rally began on Dec. 19, when the company announced that it would be initiating a Phase II clinical trial to assess its cannabidiol (CBD) oral solution in epileptic children with treatment-resistant absence or seizures. The open-label, dose-finding study is expected to launch later this year. On Dec. 26, the Food and Drug Administration (FDA) also granted a Fast Track designation for the treatment of Prader-Willi syndrome.

The positive developments for Insys come after a rough year characterized by federal investigations and a collapse in the sales of the company's flagship cancer pain drug. After founder and CEO John Kapoor was arrested and charged with racketeering, the company cut ties and brought on a new management team. The Department of Justice investigation remains in play, but the company has set aside capital to settle related penalties. Revenue from Subsys and Syndros also appears to be rebounding as the development-stage pipeline advances through clinical studies. (See also: Insys Owner, Pharma Billionaire Arrested for Opioid Racket.)

Technical chart showing the performance of Insys Therapeutics, Inc. (INSY)

From a technical standpoint, the stock recently broke out from its 200-day moving average at $9.62 and its prior highs at around $10.25 to R1 resistance at $11.59. The relative strength index (RSI) appears very overbought at 85.69, but the moving average convergence divergence (MACD) remains in a bullish uptrend dating back to early November. Traders could see a near-term pullback given the lofty RSI reading, but the short-term trend remains higher, and the stock could be in the midst of a turnaround.

Traders should watch for a breakout from R1 resistance at $11.59 to R2 resistance at $13.57 or a breakdown below trendline support to the pivot point at $8.38. Given the lofty RSI reading, traders should watch for some consolidation above the trendline support and the 200-day moving average at $9.62 before a move higher. Traders should maintain a bullish bias over the short term, but the long-term trend remains less certain. (For more, see: 4 Top Pharmaceutical Stocks for 2018.)

Chart courtesy of The author holds no position in the stock(s) mentioned except through passively managed index funds.