Acacia Communications, Inc. develops, manufactures, and sells high-speed coherent optical interconnect products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific region. Its products include a series of low-power coherent digital signal processors application-specific integrated circuits and silicon photonic integrated circuits integrated into families of optical interconnect modules with transmission speeds ranging from 100 to 400 gigabits per second for use in long-haul, metro, and inter-data center markets.
Take a look at the 1-year chart of Acacia (NASDAQ: ACIA) below with the added notations:
After declining from September to May, ACIA has been trading mostly sideways for the past month. Along the way, the stock has created a key price level at $50 (blue), which has provided both support and resistance for ACIA. Now that the stock seems to be rallying back up to that level again, traders could expect some resistance.
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The Tale of the Tape: ACIA has a key level at $50. Traders could enter a long position on a break above $50, with a stop placed below that level. Traders that are bearish on the stock could enter a short position on a rally to that level 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