United Technologies Corporation provides technology products and services to building systems and aerospace industries worldwide. United Technologies Corporation offers its services through manufacturers representatives, distributors, wholesalers, dealers, retail outlets, and sales representatives, as well as directly to customers.
Take a look at the 1-year chart of Rice (NYSE: UTX) below with the added notations:
After trending lower last summer and fall, UTX formed what appears to be a double bottom (blue) price pattern. The pattern is as simple as it sounds: Bottoming, rallying up to a point, selling back off to a similar bottom, and then rallying back up again. As with any price pattern, a confirmation of the pattern is needed.
UTX confirmed the pattern by breaking up through the $100 resistance (green) that was created by the double bottom pattern. Ideally, an increase in volume on the breakout would’ve been preferred.
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The Tale of the Tape: After trending lower last year, UTX confirmed a double bottom price pattern. A long trade could be entered on a pullback down to the $100 level with a stop placed under 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