AMGN Stock: A Break Above $182.50 Will Set the Wheels in Motion
I am focusing on Amgen, Inc. (NASDAQ:AMGN) stock because there are two factors that are worthy of excitement. First and foremost, I find the AMGEN stock chart compelling. New indicators on the company’s stock chart are suggesting that holding a bullish bias on this investment is warranted.
The second factor is that AMGN stock is a biotechnology stock; this sector has lagged the major market indices, but there is growing evidence that this sector is beginning to move. This move toward higher stock prices is only in its infancy and, therefore, it is worthy of excitement.
Just to clarify before I move forward, all my views on the biotech sector and Amgen stock have been created using technical analysis. This method of investment analysis employs historical data in order to speculate on what the future may bring. In terms of Amgen, it’s a future that I believe warrants a bullish outlook.
A sector-wide advance, which is occurring within the biotechnology space, creates a tailwind what serves to push all investments in this space forward. Finding an investment like Amgen with a constructive price chart in the biotech sector provides an opportunity to create an investment strategy. This strategy is tilted toward a bullish outcome because bullish trading setups will have a higher likelihood of succeeding based on the bullish tailwind that is now in development.
The following Amgen stock chart illustrates that a long-term indicator has just swung into bullish alignment.
Chart courtesy of StockCharts.com
The focus of this AMGN stock chart is the momentum indicator located in the lower panel labeled “MACD,” which is an acronym for moving average convergence/divergence. This indicator is used to distinguish whether bullish or bearish momentum is dominating the trading action. Momentum is required to stage either an advance or a decline. Therefore, it’s a good idea to pay attention to this indicator. The way that the MACD indicator is aligned will suggest whether the investment is geared toward staging an advance or a decline.
For example, in November 2011, a bullish MACD cross was generated, which suggested that bullish momentum was influencing the trading action, and that, therefore, the AMGN stock price was geared toward higher prices. While this indicator was in bullish alignment, Amgen stock appreciated by 212.08%.
It was not until August 2015 that a bearish MACD cross was generated, which indicated that bearish momentum was now in control and that lower AMGN stock prices were likely to prevail. The bearish MACD cross effectively suggested that the run toward higher AMGN stock prices had finally concluded and that a correction was in order.
This correction was in development for two years, until a new bullish MACD cross was generated in June 2017. This bullish indication is suggesting that a new advance is set to take place because bullish momentum is once again influencing the trading action, creating a path of least resistance that is geared toward higher stock prices.
The following Amgen stock chart illustrates a level of price resistance that will act as a trigger that indicates when the next price advance is set to commence.
Chart courtesy of StockCharts.com
This AMGN stock chart highlights a technical price pattern that is referred to as a “cup and handle.” This pattern gets its name for obvious reasons, which is directly related to a picture that it paints on the stock chart.
This pattern contains two troughs, the first being much larger than the second. These troughs are created as a result of a significant level of price resistance that prevents the stock price from advancing. In order to complete the pattern, the stock price needs to break above this level of resistance, which currently stands at $182.50. Once this level is breached, it will indicate that higher prices are likely to follow. As a result, a close above $182.50 will act as a trigger to suggest that higher prices are on the horizon.
This cup and handle pattern will not only suggest that higher prices are likely, it is also instrumental in providing a preliminary price objective. This objective is obtained by taking the depth of the cup and extrapolating that value above the level of price resistance. A break above $182.50 would suggest that a price objective of $215.00 is likely to be attained on the next leg higher.
Bottom Line on Amgen
There is a bullish tailwind being generated in the biotechnology space, and shares of Amgen stock stand to benefit. There are indications on the AMGN stock chart that are suggesting that the price is due for an advance. A break above $182.50 would open the door to much higher prices, and it is why I currently hold a bullish view on this investment.