This stock has been in a downtrend since mid 2006, with an accelerated slope since October 2007. It was using two trendlines as support and resistance before breaking down below that support in February, and has now come up and bounced off basically both of those lines since they are very close to each other right now. This appears to be a very strong area of resistance, and there is also a confirmation from the MACD and stochastics.
The stock is currently at $28.55. Support is around $23.25 and resistance is around $29.40. I actually bought the option when the stock was down around $28.25, so I’m a little bit in the red, but I like the pattern and this looks like a good trade.
My exit orders are:
-
Market order to exit if the stock trades above $30.40
-
Trailing stop loss if the stock trades below $24.00
-
Stop loss on the option at $4.00
