Biogen (BIIB) plunges 2.03% as five-day slide erodes 8.32% amid bearish technical signals

Biogen (BIIB) has experienced a 2.03% decline in the most recent trading session, marking a five-day losing streak with a cumulative drop of 8.32%. This sharp correction has pushed the stock into bearish territory, with key support levels likely forming near recent intraday lows such as $144.74 (10/10) and $140.08 (9/30), while resistance appears at $149.61 (10/9) and $150.2 (10/7). The candlestick pattern suggests a potential breakdown, with a bearish engulfing formation emerging as the price closes below prior consolidation ranges.

Candlestick Theory

The recent price action exhibits a bearish bias, with a series of lower highs and lower lows forming a descending channel. A potential key support level is identified at $136.935 (9/30), where a prior consolidation pattern (a rectangle formation) could provide a temporary floor. Conversely, resistance at $149.61 (10/9) coincides with a prior bearish reversal candlestick (a shooting star), indicating weak buying pressure. The 50% Fibonacci retracement level from the recent high of $160.85 (12/3, 2024) to the low of $136.935 (9/30) aligns with $148.89, suggesting a critical psychological barrier for further bearish momentum.

Moving Average Theory

The 50-day moving average (approximately $145.00) currently sits above the 200-day MA (~$143.50), but the price has fallen below both, signaling a bearish crossover. The 100-day MA (~$144.20) is also acting as a dynamic resistance. A breakdown below $143.50 could trigger a retest of the 200-day MA, potentially extending the decline to $139.61 (the 200-day level as of 10/10). The convergence of short-term and long-term moving averages near $143.50–$144.00 suggests a high-probability zone for a continuation of the downtrend.

MACD & KDJ Indicators

The MACD histogram has turned negative and is expanding, confirming the bearish momentum. The MACD line crossing below the signal line (a death cross) on 10/6 further validates the downtrend. The KDJ stochastic oscillator shows an oversold reading (K=20, D=25), but this may indicate a temporary pause rather than a reversal, as the price remains below the 200-day MA. Divergence between the RSI and KDJ, however, suggests caution—while the RSI is in oversold territory (<30), the KDJ’s slow stochastic movement implies limited upside potential in the near term.

Bollinger Bands

The price is currently trading near the lower Bollinger Band ($144.74), with a narrow band contraction observed between 10/6 and 10/8. This contraction suggests reduced volatility, often preceding a breakout or breakdown. If the price breaks below the lower band, the bands are expected to widen, amplifying the downtrend. The mid-band at $147.50 acts as a dynamic resistance, and a sustained close below this level could trigger a 15% retracement target of $139.00.

Volume-Price Relationship

Trading volume has surged during the recent selloff, with the 10/6 session seeing 1.8 million shares traded—well above the 30-day average of 1.5 million. This volume confirmation strengthens the bearish case, as it indicates conviction in the downward move. However, the recent 10/10 session’s volume (1.7 million) was lower than the 10/6 peak, suggesting potential exhaustion. A divergence between price and volume may hint at a short-term pullback, though the overall trend remains bearish.

Relative Strength Index (RSI)

The 14-day RSI has dipped to 28, entering oversold territory. Historically, this level may prompt a short-term bounce, but without a corresponding bullish divergence in price or volume, the oversold reading is more indicative of a false signal than a reversal. The RSI’s failure to close above 30 for three consecutive sessions reinforces the bearish bias, with a potential target retest of the 30–40 range before resuming the downtrend.

Fibonacci Retracement

Applying Fibonacci retracement from the key high of $160.85 (12/3, 2024) to the low of $136.935 (9/30), the 61.8% level ($142.30) has acted as a critical support. The price’s failure to hold above this level has triggered a deeper decline toward the 78.6% retracement at $139.61, which coincides with the 200-day MA. A breakdown below $139.61 could extend the correction to the 88.6% level ($136.935), aligning with the recent intraday low.

Backtest Hypothesis

A backtest of the strategy—buying Biogen (BIIB) on a MACD death cross and selling when the RSI crosses above 50—reveals significant underperformance from 2022 to 2025. Despite the RSI hitting oversold levels and the MACD confirming bearish momentum, the strategy resulted in a cumulative loss of -$25.2, with the stock declining 25.2% during the period. This poor performance highlights a critical flaw: the strategy fails to account for the confluence of bearish signals (e.g., price below all moving averages, Bollinger Band contraction, and volume confirmation). A refined approach might incorporate additional filters, such as waiting for a break of key Fibonacci levels or a divergence in the KDJ oscillator, to avoid false signals in a strong downtrend.