Western Digital Corp (NASDAQ: WDC)

Western Digital Corporation, through its subsidiaries, develops, manufactures, and sells storage products and solutions that enable people to create, manage, experience, and preserve digital content. It provides hard drives and solid-state hybrid drives for desktop and mobile personal computers (PCs); and hard drives and solid-state drives for performance enterprise and capacity enterprise markets. The company also offers drives used in consumer electronic solutions, such as digital video recorders, gaming consoles, set top boxes, camcorders, and entertainment and navigation systems in automobiles.

To review Western’s stock, please take a look at the 1-year chart of WDC (Western Digital Corporation) below with my added notations:

1-year chart of WDC (Western Digital Corporation)

Since the beginning of the year WDC has essentially been trading sideways while forming a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. WDC’s rectangle pattern has formed a $90 resistance (red) and an $82.50 support (blue). A break above $90 would also be a new 52-week high.

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The Tale of the Tape: WDC is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $82.50, or on a breakout above $90. The ideal short opportunity would be on a break below $82.50.

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