Over the last two weeks, I’ve kept an eye on the iShares Biotechnology ETF (IBB).
This exchange-traded fund (ETF) gives investors exposure to U.S. companies in the biotechnology industry.
Some of its top holdings include companies such as Amgen, Gilead Sciences, Regeneron Pharmaceuticals, and Moderna. (If you’d like more information on this ETF, you can do so here.)
IBB topped out in August 2021 at $176.21. Since that top, IBB has slid over 30% and is trading as low as $119.60.
I’ve been waiting for this ETF to show signs of bottoming out and now my analysis shows some buyers are stepping back into the market.
Check out this 4-hour timeframe chart of IBB below…
This is one of my favorite technical chart patterns of all time: the head and shoulders – a classic reversal setup.
It often appears once a trend is exhausted, and the ensuing breakout is usually explosive in nature.
It’s also my favorite pattern to trade because it’s a dead simple setup.
But before I explain how I’d trade the head and shoulders, let me break it down…
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This chart pattern has three key defining features – the left shoulder, the head, and the right shoulder as labeled on the chart.
Take another look…
The pattern is complete once prices break and close above the neckline. The neckline is a trendline drawn by connecting the peaks of the left and right shoulders (blue line).
Once prices break past the neckline, they typically travel at least as far as the same distance measured from the head to the neckline.
For IBB, this measurement comes out to $15.68, giving us a minimum target on this setup of around $154.
Right now, prices are still trading below the neckline, so the pattern hasn’t been triggered yet.
I’d keep an eye on the neckline. If prices can break and hold above it, then my target for IBB is at least $154.
Happy Trading,
Imre Gams
Analyst, Market Minute
Reader Mailbag
In today’s mailbag, Market Minute subscriber Jacita shares her thoughts about Jeff’s recent presentation with his son Grant…
This event couldn’t come fast enough. There was no way I would’ve missed it, unless there were circumstances beyond my control. I also watched the three videos and read the report as you suggested.
I had to get another email but believe me – I watched every second. I was really excited for Grant, and I’m using your recommendation to try and do the same thing. I’m continuing to learn from you and intend to follow you long term. Please wish me well!
Since I’m just starting to invest, I’m so thankful that I’m starting out with options. I’ve purchased a few stocks, but I’m definitely devoted to options. I absolutely enjoy learning about the different strategies from you, and now I can’t imagine doing anything else. I’ve found my niche.
I’ll learn everything that I possibly can from you and hopefully one day soon, I’ll experience financial freedom (can’t wait). I know it’s a process, but I’m learning to be patient.
Thank you for helping me make my dreams come true. I can continue making a difference in the lives of others, but on a very different level… just as you have.
– Jacita W.
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