Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD)

Ironwood Pharmaceuticals, Inc., an entrepreneurial pharmaceutical company, discovers, develops, and commercializes human therapeutic products. The company’s lead product candidate, linaclotide, a guanylate cyclase type-C agonist for irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC) gastrointestinal disorders under the LINZESS name in the United States and Constella name in the European Union. It also has a pipeline focused on the research and development of early development candidates and discovery research programs in various therapeutic areas, including gastrointestinal diseases, central nervous system disorders, allergic conditions, and cardiovascular diseases. Ironwood Pharmaceuticals has collaboration and license agreements with Forest Laboratories, Inc.

Please take a look at the 1-year chart of IRWD (Ironwood Pharmaceuticals, Inc.) below with my added notations:

1-year chart of IRWD (Ironwood Pharmaceuticals, Inc.)

This stock is very simple. IRWD had held a very important level of support at $10 (blue) for the entire year. Regardless of what the market has or has not down over that period of time, the stock had never broken that level. Well, earlier this week IRWD broke below the $10 support and should be moving overall lower from here.

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The Tale of the Tape: IRWD had a key level of support at $10. Now that the stock has broken support, a trader might want to enter a short trade at or near the $10 level with a stop placed above that level. A break back above $10 would negate the forecast for a move lower.

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

Follow me on Twitter: @cmtstockcoach