OpenTable Inc. (NASDAQ: OPEN)

OpenTable, Inc. provides restaurant reservation solutions in the United States, Canada, Germany, Japan, Mexico, and the United Kingdom. It offers solutions that form an online network connecting reservation-taking restaurants and people who dine at those restaurants. The company provides electronic reservation book (ERB) that combines proprietary software and computer hardware to deliver a solution, whcih computerizes restaurant host-stand operations. The ERB streamlines and enhances various functions and processes for restaurants, including reservation management, table management, guest recognition, and email marketing. The company also operates opentable.com, a restaurant reservation Website that enables diners to find, choose, and book tables at restaurants on the OpenTable network in real time. In addition, it offers Connect, a Web-based service that enables restaurants to accept online reservations from the OpenTable network, as well as through its mobile applications and restaurants’ Websites. Further, the company provides POP program, which lets restaurants offer diners bonus Dining Reward Points for reservations at select times; and telephone reservation management services for restaurants.

To review Open Table’s stock for potential trading opportunities, please take a look at the 1-year chart of OPEN (Open Table, Inc.) below with my added notations:

1-year chart of OPEN (Open Table, Inc.)

What I like about the chart of OPEN is its one simple price level at $45 (blue). Not only can you see the $45 resistance from April thru August, but $45 was also a support and resistance area back in December and January as well. So, the $45 price level is key to this stock. Last month OPEN hit that level as resistance yet again.

The Tale of the Tape: OPEN presents two very simple trading opportunities based on its key level of $45: A long position could be entered on a break above $45 with a stop placed below that level, or a short play could be made on a rally back up to $45.

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!

Good luck!

Christian Tharp, CMT