BIIB Stock: This Trigger Will Set the Wheels in Motion
I am watching Biogen Inc (NASDAQ:BIIB) stock like a hawk, because I’m inclined to believe that this biotech stock is on the verge of breaking out to the upside. This breakout would set the wheels in motion to send BIIB stock on a bullish ride toward higher prices.
This bullish view on Biogen stock is being reinforced by a number of indications, and the fact that the once-lagging biotechnology sector is now beginning to perform only adds credence to my belief that a bullish outcome is on the horizon.
A number of my publications have focused on Biogen stock because I have tended to believe that a bottom in this stock was being forged. I have been outlining certain developments on the company’s stock chart as they occur, because they support the idea that BIIB stock has bottomed.
The following stock chart illustrates two indications that are supporting and reinforcing the notion that Biogen stock has bottomed.
Chart courtesy of StockCharts.com
There are two distinct indications highlighted on this BIIB stock chart that give me reason to believe that a bottom is being forged.
The first indication was generated using the Fibonacci retracement numbers. This mathematical sequence of numbers is used to identify countertrend price objectives. The theory behind these numbers is that, when a stock price pulls back from a primary move, it will retrace approximately 50%–62% of that move before the predominant trend reasserts itself.
This retracement level is so popular among the trading community that it is referred to as trading into “the box.” BIIB stock fell into the box in June 2016, and it served as an indication to exit any bearish positions and to start building bullish ones.
The second indication was generated by using the moving average convergence/divergence (MACD) indicator, which is located in the lower panel of the above stock chart. MACD is a trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum. In order to stage an advance or decline, momentum is needed. This indicator suggests whether bullish or bearish momentum is influencing the trading action in a stock.
In early 2010, a bullish MACD cross was generated, indicating that bullish momentum was influencing the Biogen stock price. This paved the way to higher stock prices, and BIIB stock appreciated to the tune of 553.33% before a bearish cross halted this advance. A new bullish MACD cross was generated in June of this year, and I can only presume that similar bullish implications are now set to follow.
These two indications effectively suggest that BIIB stock has seen its lows, and that higher stock prices are on the horizon. Luckily, the price action has provided me with a constructive price pattern that can be used to suggest that a price advance is underway.
The following Biogen stock chart illustrates the trigger that can be used to indicate that a stock price advance has commenced.
Chart courtesy of StockCharts.com
The constructive price pattern I am referring to is a cup and handle pattern, which is highlighted on the above stock chart.
This technical price pattern contains two troughs, and the first trough is much larger than the second. These troughs paint a picture that resembles a teacup. This pattern is created as a result of Biogen stock being rejected by a significant level of price resistance.
This level of resistance began its development in July 2015, when the stock price gapped lower following a disappointing earnings quarter, which included dismal forward guidance. Just over a year later, in August 2016, the stock price nearly matched this level, but that attempt quickly failed. Ever since then, this level of price resistance has contained the stock from advancing beyond it.
Breaking above this level of resistance would complete the cup and handle price pattern and imply that higher stock prices are likely to follow. At the current juncture, that level sits at $300.00, and breaking above this price would suggest that the stock price is set to appreciate.
Bottom Line on Biogen Stock
All the pieces are slowly coming together for Biogen stock. A number of indications are already suggesting that a bottom is in. Therefore, the path of least resistance is geared toward higher stock prices. A break above the price resistance that currently sits at $300.00 would act as a trigger to confirm that BIIB stock is staging a bullish advance.