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

Easy Trade of the Day:

DWRE breaks resistance

DWRE has been trending lower since last July, but over the most recent 3 months the $40 price level (blue) has become very important to the stock. Not only was $40 a key support level back in January, but that level was also resistance multiple times in March. Now that DWRE has broken above $40 that should open the door to higher prices for the stock.

The Tale of the Tape

DWRE has broken through resistance at $40. A trader could enter a long position on a pullback down to $40 with a stop placed under the level. However, if traders are bearish on the stock, a short trade could be made if the stock breaks back below $40.

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