Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that offers sellers to payment and point-of-sale solutions.
Take a look at the 1-year chart of Square (NYSE: SQ) with the added notations:
During the past 4 months, SQ had formed a very important level of support at $60 (red). Last week saw the stock break below that support. Not only does that imply lower prices overall for SQ, but the $60 level should now act as resistance on any future rallies, as it has done this week.
The Tale of the Tape: SQ broke a key level of support at $60. A trader could enter a short position on any rallies up to or near $60 with a stop placed above the level. If the stock were to break back above the $60 level, a long position might be entered instead.
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