Cadence Design Systems, Inc. engages in the design and development of integrated circuits and electronic devices. Its products include electronic design automation, software, emulation hardware, and intellectual property, commonly referred to as verification IP, and design IP.
Take a look at the 6-month chart of Cadence (CDNS) below with the added notations:
Chart of CDNS provided by TradingView
Over the course of the past 6 months, CDNS has formed an important level to watch around the $161 area (yellow), as that level has provided both support and resistance on many occasions. The stock just tested that area as support again, and that could lead to another bounce higher.
The Tale of the Tape: CDNS has a key price zone at around $161. A trader could enter a long position on a pullback down to 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 back below $161 instead.
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
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