Achaogen, Inc. operates as a clinical-stage biopharmaceutical company, which engages in discovering, developing, and commercializing novel antibacterials to treat multi-drug resistant (MDR) gram-negative infections. It also offers plazomicin for the treatment of serious bacterial infections.
Take a look at the 1-year chart of Achaogen (NASDAQ: AKAO) below with my added notations:
Over the past 4 months, AKAO has climbed higher and higher. During that time, the stock had also formed a nice trend line of support (blue). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. AKAO’s trendline is very important. Earlier this week, the stock broke that trendline, and should be moving lower overall, from here.
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The Tale of the Tape: AKAO has broken below trend line support. A short position could be entered on a rally up to the trendline, which is currently near $22, with a stop placed above that level.
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
Follow me on Twitter: @cmtstockcoach