The chart of Allergan plc Ordinary Shares (NYSE:AGN) has been turning heads recently. It has been in a long-term downtrend since August 2015, but with the stock forming a base and attempting to bounce off its lowest level since April 2014, it might be setting itself up for a new leg to the upside.

To better understand the trading action, let’s take a look at the year-to-date chart below.

As you can see above, a big-volume breakdown in August sent AGN below its 50-day moving average (the blue line) — an area the stock has been struggling to hold amid its downtrend. Allergan has attempted to move back above the indicator since, but on four separate occasions, AGN stock has rallied up to it only to fail and form a lower low.

That is a very negative pattern.

However, the trend may be shifting now. AGN has traded in a narrow range and formed a base over the last month. That’s encouraging because long-term downtrends typically end once the stock finds support to rally off of.

Now that the base part of that equation has been achieved, I’m looking for the stock to break its trend of lower highs and lows. The first step toward that would be a rally above the 50-day moving average, and AGN did close above that indicator on Wednesday. That’s a good sign, but we still need to see a few days of follow-through — which we definitely are seeing today — before a breakout can be confirmed.

Longer-term, AGN also needs to move back above price resistance around $220 before the downtrend can officially be considered over.

Until then, I am cautiously optimistic here.

Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.