Carvana Co (NYSE: CVNA)

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying used cars in the United States. The company purchases, reconditions, sells, and delivers vehicles.

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

1-year chart of Carvana (NYSE: CVNA)

CVNA has formed an important level of support at $30 (green) over the course of the past couple of months. In addition, the stock has created a key level at $40 (red) that has provided both support and resistance since November. CVNA appears to be on its way back to that $40 mark, and a break through it should lead to even higher prices.

The Tale of the Tape: CVNA has key levels at both $30 and $40. Traders that are bearish on the stock might want to enter a short position on a test of $40, or on a break below $30. Traders looking for bullish plays would likely want to get long at $30, or on a break above $40. Regardless of the trade, protective stop are always recommended.

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