Align Technology, Inc. operates as a medical device company primarily in the United States and internationally. It designs, manufactures, and markets a system of clear aligner therapy, intra-oral scanners, and computer-aided design and computer-aided manufacturing (CAD/CAM) digital services that are used in dentistry, orthodontics, and dental records storage. The company operates through two segments: Clear Aligner, and Scanners and CAD/CAM Services.
Please take a look at the 6-month chart of ALGN (Align Technology, Inc.) below with my added notations:
ALGN hasn’t really done a whole lot over the last 6 months having traded in the mid-50’s most of the time. There are 3 very common price levels on this stock during those 6 months: $52 (blue), $56 (green) and $60 (red). Each of those prices has been both support and resistance multiple times. Recently the stock fell below $52, which should lead to lower prices, most likely to the next $4 increment down ($48).
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The Tale of the Tape: ALGN just broke its $52 support. A long trade could be made on a break back above $52 with an expectation of a run to $56. A short trade could be made on a rally up to $52 with a stop placed above that level.
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