Dollar General Corp. (NYSE: DG)

Dollar General Corporation, a discount retailer, provides various merchandise products in the southern, southwestern, midwestern, and eastern United States.

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

1-year chart of Dollar (NYSE: DG)

After breaking above the $80 resistance area, DG created another resistance level at $85 (green), which was also the stock’s 52-week high resistance barrier. The stock finally broke above that level, and moved higher, as expected. Now that DG is pulling back, traders could look to enter a position at a more desirable price.

The Tale of the Tape: DG is declining towards its key level of $85. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $85 could negate the forecast for a move higher.

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