Christian Tharp, CMT
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Christian Tharp, CMT in Trading Made Simple,

Easy Trade of the Day:

RARE confirms a bottom

After hitting new 52-week lows to start off the year, RARE formed a double bottom (blue) price pattern. The pattern is as simple as it sounds: Bottoming, rallying up to a point, selling back off to a similar bottom, and then rallying back up again. As with any price pattern, a confirmation of the pattern is needed. RARE confirmed the pattern by breaking up through the $70 resistance (green) that was created by the double bottom pattern.

The Tale of the Tape

RARE confirmed a double bottom price pattern. A long trade could be entered on a pullback down to the $70 level with a stop placed under that level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

@cmtstockcoach