Biogen (BIIB) Is Heading for a Significant Recovery - TheStreet

The basing pattern that Biogen (BIIB) - Get Report began to form in late August continues to strengthen, propelling the stock toward a potential recovery.

Biogen is in the process on putting three straight monthly lows near a major support zone. Since Biogen's bounce off its Aug. 24 spike low failed on Sept. 17, the $255 area has held in extremely well. The stock held this area at this month's low, and over the past two weeks it has been steadily improving.

For Biogen investors, this increasingly bullish pattern should be encouraging. If the stock can maintain its current lows, a significant recovery move could be soon on the way.

Back on Oct. 13, Biogen took out both its August and September lows. Despite this considerable damage, there was zero downside follow-through. Major support near the stock's 40-week moving average, as well as a powerful upside breakout gap left behind back in November 2013, attracted enough bullish attention to limit the damage. The stock has drifted higher since, and despite giving back over half of its earnings-inspired ramp last Wednesday, it closed Monday well above last week's low.

In the near term, Biogen bulls should consider the stock a buy on weakness. Biogen has a very solid floor in place now that runs from the August low of $265 down to the current October bottom at $254. The stock's 40-week moving average sits at $254.15 this week and remains in a upward slope.

Biogen still has significant overhead resistance to work through once a rebound fully takes hold. A big hurdle for the bulls will be the $293 area. A move past this area, which includes the Oct. 15, 2014, low of $292.90, as well as a declining 50-day moving average, should give investors a big boost in confidence.

Click here to see the below chart in a new window.

Image placeholder title

Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.