Take a look at the 1-year chart of Glaxo (NYSE: GSK) below with my added notations:
GSK has been trending lower for the past 4 months. Over that time, the stock has formed an important trend line of resistance (red). Any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. GSK obviously has an important trendline of resistance, which currently sits right around $43. The stock appears to be on its way down to its $40 support (green).
The Tale of the Tape: GSK is currently stuck under a down trending resistance. A break above that resistance should mean higher prices, thus a long trade could be made either then, or on a fall to the $40 support. Short traders might look to enter a trade at the resistance.
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