The chip industry remains a hot one and we have one stock that has already shown a break out that could be on its way higher. Micron Technology (MU) made a strong move through not one, but two levels of resistance after a long period of consolidation, aided by the move higher by the overall market. However, MU is worth a special look as it makes a strong move higher past a well-defined resistance area of 65-65.50.
A move like this is worth noting, but at the same time a good entry is key to getting the most out of your trade. A pullback to this resistance, now turned support, level would present the best risk vs. reward, rather than just chasing the stock higher on a break out. Chasing could set you up for hitting a stop loss for those who set one before entering a trade, something I strongly recommend doing.
In order to avoid this happening in the event of a pullback, you’ll want to exercise your patience and wait for this pullback to take place. Alternatively, you can scale into your position and avoid going full size upon entry. That way, if there is a pullback you can then use that to add, eventually bring your position to its full size.
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