United Continental Holdings Inc (NYSE: UAL)

United Continental Holdings, Inc., together with its subsidiaries, provides air transportation services in North America, the Asia-Pacific, Europe, the Middle East, Africa, and Latin America. It transports people and cargo through its mainline operations, which use jet aircraft with approximately 118 seats, and its regional operations. The company operates an average of approximately 5,000 flights a day to 352 airports. It also sells fuel; and provides maintenance, ground handling, and catering services for third parties.

Take a look at the 1-year chart of United (NYSE: UAL) with the added notations:

1-year chart of United (NYSE: UAL)

After its decline during the spring of 2015, UAL started trading in an overall sideways move. During that time, the stock also created an important level of support at $50 (red). Once UAL broke that support in early January, lower prices followed, as one would expect. Traders could now look for that $50 level to act as resistance if approached.

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The Tale of the Tape: UAL broke a key level of support at $50. A trader could enter a short position on any rallies up to or near $50 with a stop placed above the level. If the stock were to break back above the $50 level, a long position might be entered 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!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach