Will This Stock Breaks Out Or Down?

WestRock Co. (WRK) engages in the provision of paper and packaging solutions. It operates through the following segments: Corrugated Packaging and Consumer Packaging. Take a look at the 6-month chart of WRK below with the added notations…

Chart of WRK provided by TradingView

WRK has declined sharply from its May peak, having fallen down into what has become a sideways trading range (blue) between a $38 support area and a $42 resistance. At some point, the stock will break out of the range, and that break will likely dictate the WRK’s next big move.

The Tale of the Tape: WRK is trading in a sideways range. Long trades could be entered on a pullback to support, or on a break of resistance, with a protective stop set underneath the point of entry. The ideal short trade could be made on a break below support.

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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