The Breakout in Biogen Stock Has Finally Arrived

BIIB Stock
Credit: iStock.com/Peshkova

BIIB Stock: Next Stage of Bull Market Has Begun

The day that I thought would never come has finally arrived. As result, I’m ecstatic to be able to explain what transpired on the Biogen stock chart this week.

I’m sure the title of this article has already given it away, but I’m happy to say that Biogen Inc (NASDAQ:BIIB) stock has finally completed a technical price pattern which is now suggesting that a bullish advance in BIIB stock is ready to begin.

I need to quickly clarify for anyone who has just come across my work for the first time. My views on an investment are generated by analyzing the price action and indications on a company’s stock chart. This method is called technical analysis and it is predicated on the notion that investments trend and that, therefore, historical price and volume data can be used to decipher these trends.

I have been using this method of analysis to create investment strategies for nearly two decades for one simple reason: when it is applied correctly, the results are outstanding.

I have been waiting for the completion of a technical price pattern on the Biogen stock chart since August of last year, which is a considerable amount of time. This spring, there was growing evidence that biotechnology stocks were beginning to stage an advance, and I knew it was only a matter of time until Biogen staged an advance. It brings me great relief to be able to say that BIIB stock has finally broken out.

The following Biogen price chart illustrates the technical price pattern that was just completed.

BIIB Stock Chart

Chart courtesy of StockCharts.com

The technical price pattern that is highlighted on the BIIB stock chart is a “cup and handle” pattern, and it is given this name because the pattern resembles a teacup.

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This technical price pattern is characterized by two distinct troughs, and the first trough is much larger than the second. These troughs are a result of Biogen stock’s inability to break above a key level of price resistance.

This key level of price resistance began its development in July 2015, following a disappointing earnings announcement that caused Biogen shares to open lower, leaving a sizable gap on the BIIB stock chart. This marked the beginning of a level of resistance that thwarted all attempts to move beyond it, until now.

On August 30, BIIB stock closed above this level of resistance, indicating that the cup and handle price pattern was complete and that, therefore, higher stock prices were expected to follow. The gap that was left on the stock chart is now very likely to get filled and, therefore, I expect Biogen shares to trade up to $354.67 in short order. This objective would mark the first stop in this new bull market.

This bullish view is being reinforced by a very significant momentum indicator that’s creating a bullish backdrop that supports the notion of higher stock prices.

The following Biogen stock chart illustrates this significant momentum indicator.

biogen price chart

Chart courtesy of StockCharts.com

This momentum indicator is located in the lower panel of the above Biogen stock chart and it is labeled “MACD,” which is the acronym for moving average convergence/divergence. MACD is a trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum. Momentum, either bullish or bearish, is required if an investment is going to make a sustained move up or down. Let me reiterate that this indication is very significant, and I do not take its implications lightly.

In early 2010, a bullish MACD cross was generated, indicating that bullish momentum was influencing the Biogen stock price. This paved the road toward higher stock prices, and BIIB stock appreciated by 553.33% before a bearish MACD cross halted any further gains. While this bearish MACD cross was in force, lower prices prevailed.

In June of this year, a bullish MACD cross was generated once again, which indicated that momentum was again favoring the bulls. This bullish MACD cross was followed by the completion of the cup and handle pattern, and these coinciding indicators are implying that a move toward higher stock prices has just begun.

Analyst Take:

Biogen stock has just completed a technical price pattern that is suggesting that higher BIIB stock prices are on the horizon. This bullish view is being reinforced by a very significant momentum indicator. These two indications are suggesting that this is only the beginning of the much larger move toward higher prices.