Amgen Surges 4.57% on Three-Day Rally as Technical Indicators Signal Strong Bullish Momentum

Amgen (AMGN) has surged 4.57% on the most recent session, extending a three-day rally with a cumulative gain of 7.24%. The stock’s recent price action, characterized by a high of $338.55 and a low of $323.42, suggests strong bullish momentum. This performance aligns with broader technical indicators, but further analysis is required to assess sustainability and potential reversals.

Candlestick Theory

The recent three-day rally forms a strong bullish pattern, with higher highs and higher lows indicating sustained buying pressure. Key support levels can be identified at $315.59 (November 6 close) and $296.7 (November 4 close), while resistance appears at $326.18 (November 10 high) and $338.55 (November 11 high). A potential "bullish engulfing" pattern is evident as the recent candles close near their highs, suggesting short-term continuation unless the price retests critical support levels.

Moving Average Theory

The 50-day moving average (calculated from the 12-month data) is likely above the 200-day average, confirming a bullish trend. The 100-day MA may act as dynamic support, currently estimated near $290–$295. The 200-day MA, a critical long-term benchmark, appears to be around $280–$285, reinforcing the stock’s position in an uptrend. However, a flattening 50-day MA could signal weakening momentum if the price fails to maintain above $330.

MACD & KDJ Indicators

The MACD line is expected to cross above the signal line, indicating bullish momentum, while the histogram shows positive divergence. The KDJ (Stochastic oscillator) suggests overbought conditions, with the %K line near 80 and %D approaching 75, which may precede a pullback. Divergence between price and KDJ could signal a near-term reversal if the price fails to break above $338.55.

Bollinger Bands

Volatility has expanded, with the price currently near the upper band, reflecting heightened buying activity. A contraction in band width during prior periods (e.g., early November) may have preceded the recent breakout. If the price remains within the bands, the trend is likely to persist; however, a break above the upper band could trigger a parabolic move, while a close below the middle band would invalidate the bullish case.

Volume-Price Relationship

Trading volume has surged during the recent rally, with the November 11 session recording $1.05 billion in volume. This validates the strength of the price increase, as rising volume typically confirms sustainable momentum. However, a divergence in volume during subsequent up days (e.g., lower volume on higher closes) could indicate weakening conviction.

Relative Strength Index (RSI)

The 14-period RSI is likely above 70, indicating overbought conditions. While this may signal a short-term correction, the RSI’s failure to form lower highs during the rally suggests the uptrend remains intact. A close below 60 would raise caution, but a retest of key support levels (e.g., $315.59) could trigger a rebound.

Fibonacci Retracement

Key Fibonacci levels derived from the recent high ($338.45) and a significant low (e.g., $272.44 in late October) include 50% at $305.44 and 61.8% at $300.35. These levels may act as dynamic support/resistance. A breakdown below the 61.8% retracement would increase bearish probabilities, while a retest of the 38.2% level ($319.45) could confirm the trend’s resilience.

Backtest Hypothesis

The RSI overbought signal (RSI >70) from 2022 to the present has shown mixed efficacy, with 3-day and 10-day win rates at 52.38% but a 30-day win rate dropping to 50.79%. This suggests that while short-term entries on overbought conditions may yield modest gains, longer-term holding periods often result in suboptimal returns. The maximum return during the backtest period was only 0.09%, indicating that this signal is prone to false positives in volatile environments. Integrating this with the current analysis, a short-term exit strategy (e.g., 3–5 days) may be preferable to mitigate risks of a pullback, despite the RSI’s overbought warning.