Equifax Inc. provides information solutions and human resources business process outsourcing services for businesses, governments, and consumers. The company operates through four segments: U.S. Information Solutions (USIS), International, Workforce Solutions, and Personal Solutions.
Take a look at the 1-year chart of Equifax (NYSE: EFX) below with added notations:
Over the past month or two, EFX has moved into a small, sideways trading range. While in that 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 EFX rectangle pattern has formed a resistance at $135 (red), and a $130 support (green), which actually dates back to early August. At some point the stock will have to break one of the two levels.
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The Tale of the Tape:: EFX is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $130 or on a breakout above $135. The ideal short opportunity would be on a break below $130.
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