It’s one of the most speculative corners of the market.
A sector filled with companies chasing cures to the world’s biggest health problems.
Some make it, most don’t.
When this space is doing well, it’s a hallmark of investors embracing risk appetite.
The challenge is obvious. This space is a landmine of drug trials, failed approvals, and news-driven spikes.
Fraud and hype are not strangers here.
That makes biotech incredibly difficult to trade if you’re guessing on headlines.
So I won’t. I don’t pretend to know drug outcomes or trial results.
What I do know is how to read the tape. Technicals give me something far more valuable than predictions: clean setups with defined risk/reward.
That’s the focus of this week’s list.
Let’s get into it.
$IBB - IShares Biotech ETF
This is why I’m stalking biotechs. $IBB holds ~250 names and gives a good feel for the space overall.
The ETF has reclaimed both the 200-day and the recent high AVWAP, which now serve as support levels. If you don’t want to play the individual names (which I totally get) a trailing stop or using the 200-day and recent high AVWAP as the mercy levels makes sense.
$ACLX - Arcellx Inc.
I love these types of setups, rounding base getting back above a 200 day moving average and a recent high avwap. Momentum has shifted back in its favor and the chart is setting up for continuation.
Levels to Watch:
That $70 area is big. Market participants pay attention to round numbers.
$AMLX - Amylyx Pharmaceuticals
A great example of the bloodbath it can be trading Biotechs. They had a failed trial in April 2024 if you couldn’t tell by the chart, but I like the steady recovery here.
Levels to Watch:
$8 is the key short-term level. Strength from there offers a nibble with clear risk where I think it could get back to $13. Below that, not touching it.
$MRUS – Merus BV
Just a clean longer-term chart, a nice base breakout that is consolidating into a bull flag ABOVE support.
Levels to Watch:
$60 is the breakout level to manage risk against, but I’m looking for a breakout above $70.
$MDGL – Madrigal Pharma
This is a heck of a base, almost 20 years in the making. Normally I don’t use monthly charts but this one was hard to ignore. A breakout above here would be big, the sky is the limit, literally.
Levels to Watch:
Last month’s low would be my level to manage risk against, but I’m patient with monthly charts. They take time. Position accordingly.
$ARQT – Arcutis Biotherapeutics
I’m already long this stock and have been for several weeks. Love the turnaround and solid risk/reward it presented against $15.50 now it’s just a trailing stop trade.
$ZBIO - Zenas Biopharma
Love the way this chart is shaping up. Clear trend reversal now with a chance to breakout (again).
Levels to Watch:
Above $17 I’d be silly not to have exposure.
My Two Cents
Biotech is one of the toughest spaces to trade.
It’s loaded with speculation, trial outcomes, and story stocks that can rip or collapse overnight.
That’s exactly why I lean on technicals here.
They give you something far more reliable than hope, clear levels to manage risk against.
At the end of the day, I want these drugs to succeed. We all do.
But history shows most of them don’t.
As investors, hope isn’t a strategy. Risk management is.
Put your confidence in the levels, not the headlines.
