Today, United Parcel Service (UPS) is setting up for just the type of trade we in this trading community like to see, something straight forward to where we can see how price will react at a key level. Here, we have two key levels to watch out for. First, let’s talk about the support level, as it is the level to watch.

Several weeks ago, UPS and its price we fluctuating between 166 and around 172. Fast forward to now, the price is once again hovering in between these two price levels, but sitting just above 166. This makes this level the key one to watch for if this level breaks down, we will likely have lower prices coming our way.

The one saving grace for the stock at this level would be to get some movement higher in the overall market, but if we have the same price action we had yesterday, then I wouldn’t hold out much hope for that. However, if that were to happen, the next level to watch would be to the upside and near 172.

If the stock can ride a wave of strength brought about by the rest of the market finding some strength, then UPS could also see a push back up to the overhead price level. A break of which could lead to prices reaching up back toward 180.

But, where does the risk vs. reward lie? At this point, we traders would want to keep an eye on price action around this 166 level. If we start to dip below and get some candle closes underneath this level, that is likely a sign of weakness and lower prices should be expected. Again, we need to gauge price action here on the higher and lower time frames to really understand what it’s telling us.

Beware of a false breakdown, and the best way to prepare for that is patience. Read the market, read volume, read each individual candle and interpret what it means for you and your trade. This is what being a trader is all about. Read the market and react, one of the worst things a trader can do is mistake that for predicting. The market doesn’t operate based on what your want it to do.

If you like The Profit Machine (TPM), then you will really like my Wednesday Profit Room trading service. Same high-quality options action, as well as more world-class trading education. As I say, the more screen time and education you expose yourself to, the better. Give it a try for one month here and if you don’t find even more value, cancel anytime. Your success as a trader is on the other side of hard work and education, will you be willing to put in the work with me as your guide? Give it a try today!

Good Luck With Your Trading!

Christian Tharp, CMT