Redfin Corporation operates as a real estate brokerage company in the United States. The company operates an online real estate marketplace and provides real estate services, such as assisting individuals to purchase or sell their residential property.
Take a look at the 1-year chart of Redfin (NASDAQ: RDFN) below with my added notations:
RDFN had consistently been hitting the $24 level (blue) as resistance for the past four months, which is a level that has also provided support. However, the stock broke through that resistance last week. Now that RDFN is sitting back on the $24 support, a bounce should be expected.
The Tale of the Tape: RDFN broke through its key level of resistance at $24. A long trade could be entered on a pull back down to that level. However, a break back below $24 could negate the forecast for a higher move and would be an opportunity to get short the stock.
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