Deluxe Corp. engages in the provision of marketing products and services. It operates through the following segments: Small Business Services, Financial Services, and Direct Checks.
Take a look at the 1-year chart of Deluxe (NYSE: DLX) below with the added notations:
After falling off a cliff in February and March, DLX formed what appears to be a double bottom (blue) price pattern. Bottoming, rallying up to a point, selling back off to a similar bottom, and then rallying back up again forms the pattern. As with any price pattern, a confirmation of the pattern is needed.
DLX confirmed the pattern by breaking up through the $30 resistance (green) that was created by the double bottom pattern.
The Tale of the Tape: After its rapid decline, DLX confirmed a double bottom price pattern. A long trade could be entered on a pullback down to the $30 level with a stop placed under that level.
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
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DLX shares were trading at $29.21 per share on Wednesday morning, down $1.72 (-5.56%). Year-to-date, DLX has declined -40.18%, versus a 0.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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