ResMed Inc. develops, manufactures, distributes, and markets medical equipment for the diagnosis, treatment, and management of respiratory disorders with a focus on sleep-disordered breathing (SDB). Its products include airflow generators, such as CPAP, VPAP and AutoSet systems for the titration and treatment of SDB; and masks, motors, and diagnostic products. The company also offers accessories and other products, such as humidifiers, carry bags, and breathing circuits, as well as data communications and control products
Take a look at the 1-year chart of Resmed (NYSE: RMD) below with my added notations:
RMD has been in a large, sideways move for most of the past year. In addition, over the past five months, the stock has created a key level of resistance at $60 (red). A break above that $60 level should mean higher prices for the stock, and RMD finally broke that resistance this week. However, traders may want to wait for another close above $60 being that the stock appeared to break $60 last month as well.
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The Tale of the Tape: RMD broke through its key level of resistance at $60. A long trade could be entered on a pull back down to that level. However, a break back below $60 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!
Christian Tharp, CMT
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