Acadia Pharmaceuticals Inc., a biopharmaceutical company, focuses on innovative treatments that address unmet medical needs in neurological and related central nervous system disorders. The company has a pipeline of product candidates led by pimavanserin, which is in Phase III development as a potential first-in-class treatment for Parkinson’s disease psychosis. It also has clinical-stage programs for chronic pain and glaucoma in collaboration with Allergan, Inc. and two advanced preclinical programs directed at Parkinson’s disease and other neurological disorders.
To review Acadia’s stock, please take a look at the 9-month chart of ACAD (Acadia Pharmaceuticals, Inc.) below with my added notations:
ACAD had been trading sideways for the last 2+ months. Over that period of time, the stock had formed a clear resistance level at $25 (blue). In addition, the stock also created a strong level of support at $20 (pink). The rectangle formation on ACAD is very helpful in trading it because at some point the stock would have to break one of the two levels the pattern had created. As you can see, last week the stock finally broke the $25 level and should be moving higher from here.
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The Tale of the Tape: ACAD recently broke out of its rectangle pattern. A pullback to $25, which the stock has already done on each of the last two trading days, would provide an opportunity to get long on the stock. However, a break back below $25 would negate the forecast for a move higher.
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
Follow me on Twitter: @cmtstockcoach