Grupo Financiero Galicia S.A. operates as a financial services holding company in Argentina. The company operates through Banking, Regional Credit Cards, CFA Personal Loans, and Insurance segments. It offers financial products and services, including collection and payment services, commercial credit cards, direct payroll deposits, capital market alternatives, foreign trade solutions, and corporate e-banking solutions; financial support and cash management services; foreign trade; corporate debt and securitization transactions; and e-collection and payment solutions to various agencies, municipalities, and universities.
Take a look at the 1-year chart of Grupo (Nasdaq: GGAL) below with my added notations:
Over the last 6 months GGAL has created a key level of support at $12 (red) and that $12 level was also the “neckline” support for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (blue).
Remember, patterns such as an H&S need to confirm to have the meaning that they imply. Confirmation of the H&S occurred when GGAL broke below its $12 support.
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The Tale of the Tape: GGAL has confirmed a head & shoulders pattern. A short trade could be entered anywhere near $12 with a stop placed above that level. A break back above $12 could negate the forecast for a move lower, thus a long position could be considered instead.
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