Johnson & Johnson is a holding company, which engages in the research and development, manufacture and sale of products in the health care field. It operates through the following segments: Consumer Health, Pharmaceutical, and Medical Devices.
Take a look at the 1-year chart of Johnson (NYSE: JNJ) below with my added notations…
Chart of JNJ provided by TradingView
JNJ has formed a down channel over the past several weeks. A channel is formed through the combination of a trend line support that runs parallel to a trend line resistance. JNJ almost tested its channel support yesterday, holding just above the line at the close.
The Tale of the Tape: JNJ has formed a down channel. A long trade could be entered on a pullback to the channel support, which is currently approaching $169, or on a break of channel resistance. Short trades could be entered at channel resistance or if the stock were to break below the channel support.
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
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