AcelRx Pharmaceuticals Inc (NASDAQ: ACRX)

AcelRx Pharmaceuticals, Inc., a specialty pharmaceutical company, develops and commercializes therapies for the treatment of acute pain. The company’s lead product candidate is Zalviso, an investigational, pre-programmed, non-invasive, handheld system that has completed Phase III clinical trials for the treatment of moderate-to-severe acute pain in the hospital setting. The company is also developing ARX-04, a sufentanil single-dose tablet, which has been planned to initiate Phase III clinical trials for the treatment of moderate-to-severe acute pain to be administered by a healthcare professional to a patient in settings of acute pain, such as in the emergency room, hospital floor, ambulatory care facilities, or on the battlefield.

Take a look at the 1-year chart of AcelRx (NASDAQ: ACRX) below with my added notations:

1-year chart of AcelRx (NASDAQ: ACRX)

Since dropping suddenly in March, ACRX has been basically trading sideways ever since. During the sideways trend, the stock had created a clear level of resistance at $5 (green). A break above that $5 level should mean higher prices for the stock, and last week ACRX finally broke that resistance.

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The Tale of the Tape: ACRX broke through its key level of resistance at $5. A long trade could be entered on a pull back down to that level. However, a break back below $5 could negate the forecast for a higher move and would be an opportunity to get short the stock.

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