Soon after surging more than 50% in the last three months alone, Immunovant (IMVT), has put together a seemingly straight forward setup for us to take a look at. This setup isn’t quite like the rest of the setups we find in our Daily Smart Reports, but this one still offers a lot of intriguing risk vs reward.
Normally, when biotech companies experience such a move, there is some pullback as investors and traders try to decide on the price of the stock. If the move was news driven, these gains could be short lived. However, we have our levels to watch, so whatever story price begins to tell us, that will be the lead for our trade.
As for our levels, we have a major support level around 32.5 where price has already tried to test several times and failed to go lower. That’s good news in the short term as this could still act as support and supply us with a bounce level to watch.
To the upside, we do have some resistance that it will take some significant volume to get through. the 37.5 mark is the one you want to keep your eyes on for an uptrend entry. If either of these levels were to break with price holding above or below the corresponding level, that is the side of the trade you want to be on.
This is the type of trade where patience comes in to play more than most other trades. A trade like this will have traders thinking they know what will happen next instead of letting price dictate the trade for them. Don’t get sucked in to chasing a breakout or breakdown. Be patient, see how price action is responding to levels, then from a cool and calm state of mind, make your trade with your risk management already worked out.
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Good Luck With Your Trading!
Christian Tharp, CMT