NBIX Stock: Waiting on a Breakout
I am super excited about the prospects of Neurocrine Biosciences, Inc. (NASDAQ:NBIX) stock going forward. This excitement is stemming from the beautiful price pattern that is being painted on the Neurocrine Biosciences stock chart. Aside from its beauty, the size and scope of it is really intriguing. Let’s not forget that NBIX stock is a biotechnology stock, and this sector has been red hot as of late. I have been focusing on a number of biotechnology stocks because this lagging sector is finally begging to participate in the broad-based market rally.
For those not familiar with my work, I use technical analysis to produce my views on a potential investment. This method of investment analysis relies on historical volume and price data to understand the direction that the stock is moving in, and to shed some light on what the future may bring.
The technical price pattern that is bringing me great excitement is illustrated on the following Neurocrine Biosciences stock chart.
Chart courtesy of StockCharts.com
As you can see, the technical price pattern highlighted on the NBIX stock chart is a symmetrical triangle. This technical price pattern is a consolidation pattern that contains two converging trend lines. One line represents resistance, while the other represents support. These trend lines are a result of each subsequent rally ending at a lower high and each subsequent sell-off ending at a higher low.
These patterns are notorious for their powerful breakouts, because as the pattern progresses, momentum is being built and stored within it. This momentum will finally be released when the stock price either breaks above resistance or falls below support.
Longer and larger triangles build more momentum, and as a result, a larger reaction is expected when the pattern is finally completed. The pattern that is being painted on the NBIX stock chart is now two years in development, making it a fairly large pattern, meaning a fairly large reaction can be expected to occur once the pattern is resolved.
I have the inclination to believe that this pattern will resolve itself in a bullish manner, because this symmetrical triangle is actually just a small piece of a much larger wave structure. This wave structure is illustrated on the following Neurocrine Biosciences stock chart.
Chart courtesy of StockCharts.com
The NBIX stock chart above is an excellent example of constructive price action. Constructive price action consists of impulse waves that advance the stock price, and consolidation waves, where these new higher prices are digested. Consolidation waves are essential in a healthy trend because they alleviate any overbought conditions and set up the next advancing impulse wave.
As you can see, the symmetrical triangle that is currently in development is just a single consolidation wave within a much larger wave structure. The waves within this structure feed off each other, creating the necessary conditions where a trend can sustain itself.
The symmetrical triangle I highlighted on the first chart doesn’t seem so large within the context of this large wave structure, but what does remain the same is the reaction that will follow once the stock price exits this pattern. I have the inclination to believe that the symmetrical triangle will resolve itself in a bullish manner, based on the bullish trend that is in development within the larger-term wave structure on the Neurocrine Biosciences stock chart.
The moving average convergence/divergence (MACD) indicator is converging and a bullish cross can develop in the months ahead. MACD is a trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum. Momentum is a factor that is required when a stock is staging an advance or a decline.
As you can see from the price chart, the alignment of the MACD indicator has coincided with the appropriate wave that is in development. When the MACD indicator is in bullish alignment, an impulse wave is in development. When the MACD indicator is in bearish alignment, a consolidation wave is in development.
In February of this year, the MACD indicator swung into bearish alignment and a consolidation wave has been in development as a result. The MACD indicator is currently converging, and a bullish cross would suggest that the consolidation wave is complete and a new advancing impulse wave is set to develop.
A confirmed close above $56.00 would signal that NBIX stock is proceeding on the next leg of its epic bull market.
Bottom Line on NBIX Stock
The predominant trend influencing Neurocrine Biosciences stock is a bullish one, and therefore a bullish view is warranted. The price action on the NBIX stock chart is suggesting that the next advancement towards higher prices is setting up, and breakout of the symmetrical triangle will act as an indication, signalling that such an event is now upon us.