Zynerba Pharmaceuticals, Inc. operates as a clinical stage specialty pharmaceutical company. It focuses on developing pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders.
Take a look at the 1-year chart of Zynerba (NASDAQ: ZYNE) below with the added notations:
A rising wedge is a type of triangle formation in which the stock (ZYNE) has formed an up trending resistance line and an up-trending support level (green). These two lines converge on one another to form the wedge, which is a terminal, bearish pattern. Confirmation of the pattern would occur if the ZYNE broke the up-trending support, which is approaching $14.
The Tale of the Tape: ZYNE has created a rising wedge pattern, which should lead to a break lower. A short trade could be entered on a break out of the bottom of the wedge, which currently sits just under $14. If a trader believes the stock has higher prices in it’s future, a long play could be made instead at that support with a stop placed below that level.
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