ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD)

ACADIA Pharmaceuticals, Inc. operates as a biopharmaceutical company focused on the development and commercialization of medicines to address unmet medical needs in central nervous system, or CNS, disorders. It operates through development and commercialization of innovative medicines segment.

Take a look at the 1-year chart of ACADIA Pharmaceuticals (NASDAQ: ACAD) below with the added notations:

1-year chart of ACADIA Pharmaceuticals

Over the course of the past 3 months, ACAD has formed an important level to watch at the $45 (blue) mark. That level was resistance back in September, and now the stock has tested it as support multiple times as well.

The Tale of the Tape: ACAD has a key level at $45. A trader could enter a long position on a pullback down to that level with a stop placed under it. However, if traders are bearish on the stock, a short trade could be made instead on a break back below the $45 mark.

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