GSK declines with trendline

GSK has been trending lower for the past 4 months. Over that time, the stock has formed an important trend line of resistance (red). Any (2) points can start a trend line, but it’s the 3^rd test and beyond that confirm its importance. GSK obviously has an important trendline of resistance, which currently sits right around $43. The stock appears to be on its way down to its $40 support (green).

The Tale of the Tape:

GSK is currently stuck under a down trending resistance. A break above that resistance should mean higher prices, thus a long trade could be made either then, or on a fall to the $40 support. Short traders might look to enter a trade at the resistance.

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!

The Biotech Trader

@TraderBiotech