Autodesk, Inc. (NASDAQ: ADSK)

Autodesk, Inc. operates as a design software and services company worldwide. The company sells consumer products for digital art, personal design and creativity, and home design in digital storefronts and over the Internet. It licenses or sells its products to customers in the architecture, engineering, and construction; manufacturing; and digital media, consumer, and entertainment industries directly, as well as through resellers and distributors.

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

1-year chart of Autodesk (NASDAQ: ADSK)

Over the past 3+ months ADSK has created a key level of support at $55 (green), which is also the “neckline” for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (red). Confirmation of the H&S would occur if ADSK were to break the support, and lower prices would be expected from there.

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The Tale of the Tape: ADSK has formed a head & shoulders pattern. A long trade could be made at $55 with a stop placed below that level, but ideally, the pattern implies a short trade to be entered on a break below that level 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