iShares NASDAQ Biotechnology Index (ETF) IBB traders finally got the breakout they were looking for earlier this month when the ETF surged through the $300 level on strong volume. Benzinga pointed out that a breakout above $300 could lead to some major upside for traders back on June 16, and the breakout that followed sent the ETF as high as $323.27 within days.
But now that the IBB has cooled down a bit, traders need to reassess the situation and determine whether or not the breakout was for real and where the ETF could be headed next.
Early indications are that the IBB breakout is not just a head-fake. After nearly six months without a single day of 3.5 million daily volume, the IBB delivered three straight days of 3.5 million-plus volume when it broke through the $300 level this month.
After jumping from around $290 to above $323 in a matter of four trading days, traders shouldn’t be surprised at the subsequent pullback to the $310 level. In fact, the IBB could even pull back to the $300 level and still have a very bullish technical chart at the moment. In the chart below, potential support levels are indicated by green lines, while resistance levels are red lines.
The $300 level was strong resistance dating back to the beginning of 2016. However, now that the IBB has broken through, $300 is a prime potential support level, especially considering it served as support in late 2015.
In fact, traders looking for a new longer-term trading range for the IBB should keep…
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