BMRN Stock: A Dominant Trend in Development
Let’s take a trip down the road of perspective, because how we perceive something will generally sway the way we feel about it. In terms of investing, these perceptions can be based on and influenced by a number of factors, ranging from what we hear in the news to other people’s opinions and our own due diligence.
I try to stay away from what the media is feeding the general public, because I prefer to generate my own opinions. That is why I base my views on an investment by analyzing its price action.
Yes, analyzing price action to determine the merits of an investment is a real method of investment analysis and it is called technical analysis. This method of investment analysis is predicated on the notion that historical price and volume data can be used to speculate on what the future may bring.
My perceptions based on price action are also influenced by a number of factors, and I have found out that different time frames can make extraordinary stocks looks boring, and vice versa. I am focusing on BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) stock because it is a prime example of this notion.
Over the last couple of years, BMRN stock has been trading within a defined range. This well-defined range has created a technical price pattern, which is highlighted on the following BioMarin Pharmaceuticals stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the BMRN stock is a descending channel.
This technical price pattern is characterized by its price action, which is a series of lower highs and lower lows. The peaks and troughs created by this sequence were used to construct two downward-sloping trend lines that captured this pattern by pinpointing where price support and price resistance reside.
A descending channel is a bearish pattern, and as long as BioMarin Pharmaceuticals stock is trading within this pattern, lower prices will prevail.
In order to negate the bearish implications suggested by this pattern, BMRN stock needs to break above resistance. Breaking below support will just reinforce the bearish implications.
In terms of perspective, looking at the price action on this two-year BMRN stock chart, one can assume that because price support outlined by the pattern was just tested, perhaps resistance outlined by the pattern will be tested next.
Other than a presumed move toward $95.00, where resistance currently resides, there is nothing really to suggest that there is anything to get excited about. That is why I didn’t get excited about this investment until I took a much longer-term view of the price action, changing the perspective.
The longer-term view is highlighted on the following BioMarin Pharmaceuticals stock chart.
Chart courtesy of StockCharts.com
This BioMarin Pharmaceuticals stock chart illustrates a bullish trend that began in 2004.
This bullish trend consists of price action characterized by a sequence of higher highs and higher lows, which is the quintessential characteristic that defines a bullish trend.
This bullish trend has been responsible for taking BioMarin Pharmaceuticals stock from a low of $3.87 in the third quarter of 2004, to where it currently resides at $92.00. This represents a 2,277.26% return, which rivals the bullish trend that is currently in development on the Alphabet Inc (NASDAQ:GOOGL) stock chart.
The uptrend line, which was created by connecting troughs that resulted from the series of higher lows, acts as a significant level of price support. This trend line is significant because BMRN stock has never traded below it. As long as BioMarin Pharmaceuticals stock is trading above it, I can only assume that a bull market is in development and that higher stock prices will prevail.
This uptrend line was just tested, and it is why this stock has piqued my interest. This test of support coincided with a test of support outlined by the descending channel, and after both metrics were tested, higher BMRN stock prices have prevailed.
I have already outlined that a break above resistance outlined by the descending channel will imply that higher stock prices are likely to follow. The successful test of the uptrend line is why I believe a bullish resolution to the descending channel is on the horizon.
If my presumptions are indeed true, then the bullish trend that began in 2004 is still in development, and the next leg in this bullish trend is now set to commence.
BioMarin Pharmaceuticals stock has just tested a very significant level of price support, and higher prices have since prevailed. I believe that this test of support is setting the stage for a much larger move toward higher BMRN stock prices.