Zendesk, Inc., a software development company, provides software-as-a-service products for organizations. Its flagship product includes Zendesk Support, a system for tracking, prioritizing, and solving customer support tickets across various channels.
Take a look at the 1-year chart of Zendesk (NYSE: ZEN) below with the added notations:
ZEN has been trending higher, overall, for the past 4 months. During the most recent few months, the stock has created a key resistance area right around $28 (red). In addition, a trendline of support (blue) has formed from the stock’s December low. Sometime soon, ZEN will break one of those two levels.
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The Tale of the Tape: ZEN has resistance around $28, and a trendline of support. A trader could enter a long position on a test of the trendline, or a break through the resistance area. However, a break below the trendline could be an opportunity to get short the stock.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach