Allegro MicroSystems’ (ALGM) Rectangle Consolidation Action
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Allegro MicroSystems, Inc. designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; and power ICs comprising motor driver ICs, and regulator and LED driver ICs, as well as photonic and 3D sensing components, including photodiodes, eye-safe lasers and rangefinders, and readout ICs for LiDAR applications.
Take a look at the 1-year chart of Allegro (NASDAQ: ALGM) below with the added notations…
Chart of ALGM provided by TradingView
At the start of the year, ALGM declined sharply down into what has become a large trading range between a $25 support (green) and a clear $30 resistance (red). At some point, the stock will break out of the range, and that break will likely dictate the stock’s next big move.
The Tale of the Tape: ALGM is trading in a sideways range. Long trades could be entered on a pullback to support, or on a break of resistance, with a protective stop set underneath the point of entry. The ideal short trade could be made on a break below support.
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
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