bluebird bio, Inc., a clinical-stage biotechnology company, focuses on developing transformative gene therapies for severe genetic and rare diseases. Its product candidates include Lenti-D, which is in phase II/III clinical studies for the treatment of cerebral adrenoleukodystrophy, a rare, hereditary neurological disorder; and LentiGlobin that is in phase I/II clinical studies for the treatment of beta-thalassemia major and severe sickle cell disease (SCD) in France, as well as a phase I study in the United States for the treatment of severe SCD.
Take a look at the 1-year chart of Bluebird (NASDAQ: BLUE) below with added notations:
Over the past month, BLUE has moved into a tight, sideways trading range. 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 BLUE rectangle pattern has formed a resistance at $60 (red), which actually dates clear back to May, and a $53 support (green). At some point the stock will have to break one of the two levels.
Join our new Linkedin Group by clicking the link below:
The Tale of the Tape: BLUE is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $53 or on a breakout above $60. The ideal short opportunity would be on a break below $53.
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