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Here are two great reasons to buy biotech right now: Technician

  • Biotech has outperformed the market in 2017.
  • The Nasdaq Biotechnology ETF, the IBB, is up more than 11 percent this year.
  • Rich Ross of Evercore ISI expects a breakout to $325.

Biotech looks ripe for a breakout, according to one top technician.

The Nasdaq Biotechnology ETF, the IBB, is booming this year, up more than 11 percent as the S&P 500 has rallied nearly 7 percent.

And while the ETF was down more than 1 percent on Friday, Rich Ross of Evercore ISI said the charts are showing "two great reasons to buy" on the dip.

First, Ross noted an ascending triangle that has formed on the chart. "This tends to be a bullish continuation pattern to the upside," he said. This type of pattern often emerges when a stock in an uptrend consolidates, the idea is that there could be a breakout above previous resistance.

"We're into well-defined resistance around $300 ... we do need to break above that resistance to really unlock the pattern, but the technicals suggest we get it," Ross said Thursday on CNBC's "Trading Nation."

The second pattern Ross noted was a "textbook" cup and handle within that ascending triangle. This type of pattern forms during a period of consolidation against a broader backdrop of a strong base of support.

Ultimately, Ross believes that when the breakout above $300 does occur, the IBB could rally as high as $325 — or another 10 percent from current levels.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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