Biotech … Downside Reversal?

Alignment of Forces

The last two updates, here and here, presented the case, forces are lining up; probability’s increasing for a downside reversal.

This update will complete the session (so far) on that potential.

Let’s not forget, behind-the-scenes (for years) stories like this and this continue to bubble to the surface.

Biotech IBB, Weekly

Last week’s trading range was significantly more narrow (with volume higher) than the week prior.

The chart shows IBB finished at or near the top of the wedge boundary and in Wyckoff ‘up-thrust’ position.

The ‘more’ promised at the end of yesterday’s update; Friday’s daily volume contracted on the test.

Stay Tuned

Charts by StockCharts, TC2000

The Danger Point®, trade mark: No. 6,505,279

Biotech ‘Dissected’

Looking at The Inside

Yesterday’s update showed biotech sector IBB, in a bearish divergence.

The list of components can be found here.

For today, we’ll look at some of the technical characteristics pointing to potential for a downside reversal (not advice, not a recommendation).

Biotech IBB, Weekly

A wedge typically occurs at the end of a move, whether up or down (not advice, not a recommendation).

Price action has met the ‘measured move’ target and even gone slightly above.

The potential bearish MACD is shown.

If the coming week is flat or down, we’ll (likely) have a tick lower in MACD, completing the divergence signal.

Fo the next update, we’ll discuss a much larger ‘terminating’ wedge and more.

Stay Tuned

Charts by StockCharts, TC2000

The Danger Point®, trade mark: No. 6,505,279

Daily & Weekly

The daily chart of IBB (left), and the weekly, are both posting bearish divergences.

Caveat: Strictly speaking, on the weekly chart, the MACD has yet to tick lower.

However, if next week’s action holds steady or posts lower, we’ll likely get that signal as well (not advice, not a recommendation).

Stay Tuned

Charts by StockCharts, TC2000

The Danger Point®, trade mark: No. 6,505,279