Amgen Builds on a Breakout

 | Sep 12, 2017 | 12:23 PM EDT
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A multiyear upside breakout on Amgen (AMGN) has our attention. Prices were stuck in a broad sideways trading range since late 2014 as dips into the $140-$130 area were bought and rallies up around $180 were sold. With AMGN trading around $188 now, it looks like a breakout is under way.

Let's check out the short-term and longer-term charts and indicators to see what strategy makes sense at this time. It is possible this large consolidation pattern can support a big advance.

In this daily bar chart of AMGN, above, we can see an uptrend progression from an early November price low. There was a meaningful correction from a March high, but prices reversed back to the upside from late May. By late July, AMGN was retesting its March zenith and in the past few sessions prices have made new highs.

AMGN is above the rising 50-day and 200-day moving averages. The daily On-Balance-Volume (OBV) line turns up at the end of May to signal more aggressive buying and to confirm the current advance. The Moving Average Convergence Divergence (MACD) oscillator turned up in late August first for a cover-shorts buy signal and earlier this month for an outright go-long signal.

In this longer-term weekly bar chart of AMGN, above, we can see the long sideways trading range. Prices are breaking out of the upper band of this range and are above the rising 40-week moving average line. Interestingly, the weekly OBV line has been neutral for the past two years. The weekly MACD oscillator turned up last month for a fresh outright go-long signal.

In this Point and Figure chart of AMGN, above, we can see a breakout at $182.34 and a longer-term bullish price projection of $230.81.

Bottom line: AMGN might have a shallow pullback before moving higher, but it does not have to listen to me. In case the rally just continues higher and higher with any corrections coming later, we would suggest doing some buying here. If prices dip back to the breakout around $182, you could consider buying more shares. A decline back below $170 would turn things negative, in my opinion. On the upside, the round number of $200 and then $225 are my upside targets.

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