Copa Holdings, S.A. (NYSE: CPA)

Copa Holdings, S.A., through its subsidiaries, provides airline passenger and cargo services in Latin America. It offers services within Colombia; and international flights from various cities in Colombia to Panama, Venezuela, Ecuador, México, Cuba, Guatemala, and Costa Rica. The company offers approximately 360 daily scheduled flights among 73 destinations in 31 countries in North, Central, and South America, as well as the Caribbean from its Panama City hub.

Take a look at the 1-year chart of Copa (NYSE: CPA) below with added notations:

1-year chart of Copa (NYSE: CPA)

CPA has been trading sideways since its May drop. While in that sideways move, the stock has formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.

The CPA rectangle pattern has formed a resistance at $55 (red), and a $50 support (green). At some point the stock will have to break one of the two levels.

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The Tale of the Tape: CPA is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $50 or on a breakout above $55. The ideal short opportunity would be on a break below $50.

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