Pinduoduo, Inc. operates as a holding company, which engages in the development and management of an e-commerce platform. Its Pinduoduo mobile application offers a selection of merchandise for buyer acquisition and engagement.
Take a look at the 1-year chart of Pinduoduo Inc (NASDAQ: PDD) below with my added notations:
PDD has formed key support in the $30 (green) area over the past six months. The stock is also declining against a down trending resistance line (red). These two levels combined have PDD stuck within a common chart pattern known as a descending triangle. Eventually, the stock will have to break one of those two levels.
The Tale of the Tape: PDD has formed a triangle pattern. A short trade could be made on a break of support or on a test of resistance. A long trade could be made at support or on a break through the triangle resistance.
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