21Vianet Group (VNET) Breaks Resistance

21Vianet Group, Inc. (VNET) engages in the provision of carrier-neutral internet data center services. It offers hosting and related services which includes managed hosting services, interconnectivity services, and value-added services…

Take a look at the 1-year chart of Vianet (NASDAQ: VNET) below with my added notations…

VNET had formed an important level of resistance at $30 (green) over the past six months, but the stock finally broke through that resistance last week. That break should lead to higher prices, overall, for the stock. If VNET were to come back down to that $30 level, which could now act as support, a bounce might be expected.

A long trade could be entered on a pull back down to the $30 level. However, a break below the $30 level could negate the forecast for a higher move and possibly be an opportunity to get short the stock.

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