Take a look at the 1-year chart of Novo (NYSE: NVO) with the added notations:
NVO has been trading sideways for almost all of 2014. In addition, since the beginning of April, the stock has found support at $42 (green) whenever that level has been approached. Now that the stock is there again, traders should be able to expect some sort of bounce. However, if the $42 support were to break, much lower prices should follow.
The Tale of the Tape: NVO has a key level of support at $42. A trader could enter a long position at $42 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
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