The Make or Break Trading Level for Caterpillar CAT

Oct 27, 2014: 11:51 AM CST

Caterpillar shares (CAT) face a critical “Make or Break” Resistance test near the $100 per share level.

Let’s highlight this level and note the breakout bullish play above or the resistance sell-swing beneath it.

I like to keep analysis simple, and the simplest plan here is to reference the key resistance at the $99.00 per share level.

Note the highlighted bar at this level and the price movement into the underside of the 50 day EMA and 200 day SMA.

We can extend the chart backwards to the Weekly Frame and see that this same level is very important now:

Price peaked into the $100 per share level at the beginning of 2013, stalled at this level (it was resistance) at the beginning of 2014, and now we see the same test (touch) of the underside of this level after the recent breakdown toward $90.00.

Whatever additional analysis we’re doing in Caterpillar, we’ll look to play bullishly on a breakout through resistance or bearishly as price may trade down against this level once again.

It’s a simplified way to view price action and the chart, but focusing on objective price levels and the movement toward or away from these “pivot points” can be helpful to incorporate into your short-term trading strategies.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

5 Comments

5 Responses to “The Make or Break Trading Level for Caterpillar CAT”

  1. Opportunities from Three Stocks Extended Nine Days in a Row Higher | Afraid to Trade.com Blog Says:

    […] The logic of a stock trading into a known resistance cluster is similar to the opportunity in Caterpillar (CAT) I highlighted in this morning’s post. […]

  2. TheExtraIncome Says:

    Based On this figure, you suggest to go strong after the break-out ?

  3. Corey Rosenbloom Says:

    Yes, a breakout higher should be expected to trigger both a short-squeeze and additional interest from buyers on the break beyond the key chart-based level.

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