ILMN breaks down

ILMN had gotten stuck trading in a sideways range from October through April. Then, in May, the stock finally broke out and ran all the way up to the mid-$240’s. Unfortunately, in July and August, ILMN fell all the way back down to where it started its rally from back in April. During that entire time, the stock created an important level of support at $180 (green). Now that the stock has broken that support, lower prices should follow.

Bottom Line: ILMN broke a key level of support at $180. A trader could enter a short position on any rallies up to or near $180 with a stop placed above the level. If the stock were to break back above the $180 level, a long position might be entered 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!

The Biotech Trader

@TraderBiotech