Autohome Inc (NYSE: ATHM)

Autohome Inc. operates as an online destination for automobile consumers in the People’s Republic of China. The company, through its Websites, autohome.com.cn and che168.com, delivers comprehensive, independent, and interactive content to automobile buyers and owners.

Take a look at the 1-year chart of Autohome (NYSE: ATHM) below with my added notations:

1-year chart of Autohome (NYSE: ATHM)

ATHM has been on a steady decline over the past five months, and during the most recent stretch the stock has created key price levels at the $65 (green) and $70 (red) marks. Those levels even extend back to early 2018 and late 2017, thus it appears they are obviously important to the stock.

The Tale of the Tape: ATHM is trading between the key levels of $65 and $70. A long trade could be made on a break above $70, with a stop placed under it, or on a pullback to $65. If traders are bearish on ATHM, short positions could be considered on a rally up to $70, or on a break below $65.

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