Biogen Inc. (BIIB) had a sharp reversal and a big pullback yesterday. What has this done to the charts and indicators? We reviewed BIIB earlier this month -- and I wrote, "After reaching our $416 price target traders can set their sights on the $523-$540 area longer-term. Expect some volatility along the way." We certainly got some volatility after prices overshot an earlier $370 target! Let's take a look at the charts again.
In this updated daily bar chart of BIIB, below, we can see a number of price gaps in recent weeks. Bulls love gaps to the upside and fear gaps to the downside, which is what we got yesterday.
Prices briefly dipped below $340, which was the lowest point traded after the huge bullish gap earlier this month. This successful test (so far) of $340 could be considered a very bullish development. We could see a $340-$390 trading range on BIIB before its next sustained move.
We know that moving average signals lag the market, but they are still bullish -- with a rising 50-day average and a bullish 200-day line. Notice the bullish golden cross of these two averages? The daily On-Balance-Volume (OBV) line still shows a rising pattern from April. The Moving Average Convergence Divergence (MACD) oscillator narrowed sharply and is likely to cross to a take-profits sell signal.
In this weekly bar chart of BIIB, below, we lose the input of the gaps as they disappear. Prices are above the rising 40-week moving average line. The weekly OBV line is showing some softness, but the MACD oscillator is still in a bullish mode above the zero line.
In this Point-and-Figure chart of BIIB, below, we can see some big moves up and down. A $285 downside price target is projected.
Bottom line: The price action is likely to stay volatile for a while, but the longer-term picture is still bullish.