Ocular Therapeutix, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapies for diseases and conditions of the eye using its proprietary hydrogel platform technology in the United States. It markets ReSure Sealant, a hydrogel-based ophthalmic wound sealant to seal corneal incisions following cataract surgery. The company’s lead product includes DEXTENZA, which is in Phase III clinical trial for the treatment of post-surgical pain and inflammation, allergic conjunctivitis; and in Phase II clinical trial for the treatment of inflammatory dry eye disease.
Take a look at the 1-year chart of Ocular (NASDAQ: OCUL) with the added notations:
Over the course of the past 3 months, OCUL has tested the $8 level (red) as support on multiple occasions. No matter what the stock had done during that time, OCUL had always managed to hold that $8 level. However, last week the $8 level broke, and now the stock should be taking another leg down.
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The Tale of the Tape: OCUL broke a key level of support at $8. A trader could enter a short position on any rallies up to or near $8 with a stop placed above the level. If the stock were to break back above the $8 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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach