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How Far Will This Industrial Stock Fall? | The Mesh Report

How Far Will This Industrial Stock Fall?

Christian Tharp, CMT December 20, 2022 Comments Off on How Far Will This Industrial Stock Fall?

Dover Corp. engages in the manufacture of equipment, components, and specialty systems. The firm also provides supporting engineering, testing, and other similar services. It operates through the following segments: Engineered Products, Fueling Solutions, Imaging and Identification, Pumps and Process Solutions, and Refrigeration and Food Equipment.

Take a look at the 1-year chart of Dover (DOV) below with the added notations:

Chart of DOV provided by TradingView

DOV had been consolidating within a clear trading range (yellow) between a $137 support and a $144 resistance. At some point, the stock had to break out of the range, which it ended up doing last week. Even lower prices seem likely, overall.

The Tale of the Tape: DOV has broken out of its trading range. A short trade could be considered on a rally back up to prior support, now resistance, with a protective 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…

Good luck!

Christian Tharp, CMT

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