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 (NASDAQ: PDD) below with the added notations:
Over the past few weeks, PDD formed a key level of support at around $90 (green) mark. That line also became the “neckline” for the stock’s head and shoulders (H&S) reversal pattern.
Confirmation of the H&S occurred yesterday when PDD broke the support, and lower prices are now expected from there.
PDD confirmed a head & shoulders pattern. Short trades could be entered at current levels, or on rallies back up to the $90 level, with a stop set above the point of entry.
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