Union Pacific Corporation owns transportation companies. Its principal operating
company, Union Pacific Railroad Company, links 23 states in the western 66% of
the country. Union Pacific Railroad Company’s business mix includes agricultural
products, automotive, chemicals, energy, industrial products and intermodal. Union
Pacific Railroad Company connects with Canada’s rail systems and is the railroad
serving six gateways to Mexico. Union Pacific Railroad Company is a Class I railroad
operating in the United States.
To review Union Pacific’s stock, please take a look at the 1-year chart of UNP (Union
Pacific Corporation) below with my added notations:
Since breaking to a new high in December, UNP has been consolidating within a
sideways, Rectangle pattern over the last (5) months. Rectangle patterns form
when a stock gets stuck bouncing between a horizontal support and resistance.
A minimum of (2) successful tests of the support and (2) successful tests of the
resistance will give you the pattern. For UNP, the Rectangle pattern has formed
a $115 resistance (l. blue) and a $105 support area (navy), which was also a key
resistance last year.
The Tale of the Tape: UNP has formed a Rectangle pattern between $105 and $115.
A long trade could be entered on a pullback to $105 or on a breakout above $115. A
short trade could be made on a rally up to $115 or on a break below $105.
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
Christian Tharp, CMT