Before discussing potential trading opportunities, please take a look at the 1-year chart of AUQ (Aurico Gold, Inc.) below with my added notations:
The Tale of the Tape: AUQ has had a very important level at $9 since April. If the stock were to approach that level again, a trader could enter a long position with a stop under that level. If AUQ were to break that support, a short position could be made with a stop above the $9 level.
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!
Christian Tharp, CMT