The biotech sector has entered 2025 with remarkable strength, showing unprecedented momentum in drug development and breakthrough therapies. Key players are demonstrating strong technical setups with RSI above 70.

Key Points

  • Biotech index showing 35% YTD gain
  • Major resistance levels broken across leaders
  • Volume analysis indicates institutional buying
  • Risk management crucial with elevated volatility

Technical Setup of Key Players

The technical setup across major biotech players reveals a fascinating pattern. Moderna, the sector’s bellwether, has formed a bull flag pattern after its recent breakout above $250. The consolidation is occurring on decreasing volume – a classic sign of a continuation pattern. Pfizer and Amgen are showing similar patterns, with their AI-driven drug discovery segments driving unprecedented growth.

Volume Profile Analysis

One of the most telling indicators of the sector’s strength is the volume profile. Looking at the VPOC (Volume Point of Control) for the sector ETF, we’re seeing a steady migration higher, indicating strong hands accumulating positions. The volume delta (buying pressure minus selling pressure) has remained consistently positive since December 2024, even during minor pullbacks.

Risk Assessment Framework

While the momentum is strong, the sector’s average true range (ATR) has expanded by 30% compared to its 2024 mean. This elevated volatility requires precise position sizing. I recommend using the following risk management framework:

  • Position sizes no larger than 1% account risk per trade
  • Stops placed below the 21-day EMA for swing trades
  • Partial profit taking at key resistance levels
  • Regular portfolio rebalancing to maintain sector exposure