Can Vertex Pharmaceuticals (VRTX) hold $205?

Vertex Pharmaceuticals, Inc. (VRTX) is a global biotechnology company. It engages in the business of discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases. The firm focuses on development and commercializing therapies for the treatment of cystic fibrosis, infectious diseases including viral infections such as influenza and bacterial infections, autoimmune diseases such as rheumatoid arthritis, cancer, inflammatory bowel disease and neurological disorders including pain and multiple sclerosis.

Take a look at the 1-year chart of VRTX below with the added notations…

Over the past several months, VRTX has formed an important level to watch at the $205 (blue) mark, as that level has provided both support and resistance. The stock is sitting right at that level now, and a decline could take over from there.

A trader could enter a long position on a break above that level with a stop placed below it. However, if traders are bearish on the stock, a short trade could be made on a break below the $205 mark.

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