NOK breaks support

Nokia Corporation is engaged in the network infrastructure, location-based technologies, and advanced technologies businesses worldwide. The Mobile Broadband segment provides mobile operators with radio and core network software together with the hardware needed to deliver mobile voice and data services. The Global Services segment offers mobile operators with a range of services, including network implementation, care, managed services, and network planning and optimization, as well as systems integration services. The HERE segment focuses on the development of location intelligence, location-based services, and local commerce. The Technologies segment is involved in the development and sale of intellectual property rights and technology licensing activities.

Take a look at the 1-year chart of Nokia (NYSE: NOK) below with my added notations:

NOK had formed a key price level at $7.60 (red) over the course of the last (5) months. In addition, the stock created a down trending resistance starting from the middle of September (blue). These two lines combined had NOK stuck trading within a common chart pattern known as a descending triangle.

At some point, the stock had to break support or break its string of lower highs, and the stock finally broke support towards the beginning of the year.

The Tale of the Tape: NOK formed a descending triangle pattern. A short trade could be made on a rally up to $7.60 with a stop placed above that level. A break back through $7.60 would set up a potential long trade with the expectation of a run back to trendline 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!

Christian Tharp, CMT

@cmtstockcoach