Electronic Arts Inc. develops, markets, publishes, and distributes games, content, and services for consoles, personal computers, mobile phones, and tablets worldwide. It develops and publishes digital interactive entertainment games primarily under the FIFA, Madden NFL, Star Wars, Battlefield, The Sims, Need for Speed, Mass Effect, Dragon Age, Plants vs. Zombies, and Titanfall brand names.
Take a look at the 1-year chart of Electronics (NASDAQ: EA) below with the added notations:
EA has been trending nicely higher for the past seven months. Over the past three months, the stock has created a key level of $80 (blue), and a trendline of support (green), the latter of which broke on Friday. An additional break of support, the $80 level, most likely means even lower prices to follow.
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The Tale of the Tape:: EA has a key level of support at $80, and a trendline of support that has already failed. A trader could enter a long position at the $80 level, with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on a break of $80.
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