Take a look at the 1-year chart of Cabela’s (NYSE: CAB) below with the added notations:
For the most part, CAB has been in a large, sideways move over the past 6 months. During that time, the $40 price level has become very important to the stock, especially as a support. You will notice on the chart above that on 3 separate occasions the price of $40 has given CAB a bounce. The one time it didn’t, the stock fell to $33.
The Tale of the Tape: CAB has a key level at $40. A trader could enter a long position on a pullback to $40 with a stop placed under the level. However, if traders are bearish on the stock, a short trade could be made instead on a break of the $40 support.
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