ServiceNow, Inc. provides enterprise cloud computing solutions that define, structure, manage, and automate services for enterprises worldwide. The company offers service management solutions for customer service, human resources, security operations, and other enterprise departments.
Take a look at the 1-year chart of Service (NYSE: NOW) below with my added notations:
NOW has formed a relatively clear up-channel over the past several months. A channel is simply the combination of a trend line support that runs parallel to a trend line resistance. When it comes to channels, remember that any (3) points can start the channel, but a 4th point or more confirms it. NOW has multiple points of channel resistance (red) and support (green).
The Tale of the Tape: NOW has formed an up-channel. A long trade could be entered on a pullback down to the channel support, which is currently sitting around $182, or on a break above channel resistance. Short opportunities would be on rallies up to channel resistance, or on a break of channel 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!
Christian Tharp, CMT