Amgen Inc. (AMGN) shares rose more than 3% this week after the company announced the results from its Phase III ARCH study. The move enabled the stock to break out from an ascending triangle chart pattern to fresh 52-week highs, while the stock may also be benefiting from favorable tailwinds in the biotechnology sector. Given these fundamental and technical factors, traders may want to keep an eye on the stock over the coming weeks.
The company's Phase III ARCH study found that 12 months of EVENITY followed by alendronate was superior compared with alendronate alone in reducing new vertebral, clinical, non-vertebral and hip fracture risk in postmenopausal women with osteoporosis at high risk for fracture. The adverse effects were similar between both treatment groups, with the exception of a previously reported imbalance in positively adjudicated cardiovascular events. (See also: Amgen Stock Falls Despite Q2 Earnings and Sales Beat.)
From a technical standpoint, the stock broke out from its prior highs, trendline resistance and R1 resistance levels at $182.10 to just above R2 resistance at $186.43. The relative strength index (RSI) moved to overbought conditions at 75.82, but the moving average convergence divergence (MACD) remains in a strong bullish uptrend. This trend suggests that the stock's rally is likely to continue over the coming weeks.
Traders should watch for a breakout from R2 resistance at $186.43 to fresh 52-week highs or some consolidation between the R1 and R2 support levels. Judging by the ascending triangle chart pattern, the stock could have significant room to run following the breakout, with a price target of nearly $200.00 measuring from July's highs to mid-August's lows. Traders should maintain a bullish bias on the stock given these recent trends. (For more, see: Here Is Why a Biotech Bounce Is Coming.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.