Giving Biogen Another Go

 | Jan 26, 2014 | 5:00 PM EST
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The last time I recommended picking up Biogen (BIIB) was in mid-December, when the biotech stock put in a healthy pullback, then held above a key support area and started firing off some buy triggers. The stock proceeded to rally $45.11, to the 1.272 Fibonacci-based target at $306 -- and I always suggest either exiting or trailing up stops at this point, so if you were in the stock my guess is that you booked some profits here. Biogen then climbed to $315.38, just about meeting target two, the 1.618 extension, at $316.46.

When a technical pattern has worked in the past, we generally want to keep a close eye on it until the pattern stops working, so I now want to set up another couple of key areas to stalk in Biogen for an additional potential buy entry.

I am projecting these levels in the same way as I've done before: Namely, to establish support levels I'm using multiple 100% projections -- measured moves, or what I call "symmetry" -- of the prior declines within the uptrend. These are illustrated on the chart below, along with a few Fibonacci-based retracements of prior swings that overlap these symmetry projections, thus further strengthening the support areas.

Biogen (BIIB) -- Daily
Source: Dynamic Trader

Two levels currently stand out, and they come in at $292.74 to $293.71 and $281.94 to $287.81. These are the zones where I'll be looking for a possible reentry. If one of them is tested, and if Biogen ends up holding above it, I will start watching for buy triggers on either a 30-minute chart or the more aggressive 15-minute chart. My risk can be defined in one of two ways: either under the low that the stock has hit prior to a trigger firing off, or just a bit below the low end of the Fibonacci price-cluster zone.

If Biogen ends up violating these key support levels, I will back off the buy side until further notice, and consider the setup a bust. However, my hope is that the recent broad-market weakness will provide us with this nice potential buy opportunity within the next week or so.

Please refer here for more information on trade triggers, and here for general guidance on Fibonacci trade setups.

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