With all the talk recently around the development of artificial intelligence, it should come as no surprise that the stock on watch today is an AI stock. However, just because there has been a surge in attention to this new and budding technology doesn’t mean a stock like C3.ai (AI) is necessarily going to be bullish.
As you can see on my chart in the video below, in fact, AI looks to have a bit of a bearish setup developing. As we have talked about in the past, support or resistance levels can often turn in to the reverse when they are broken. Meaning, as you can see in this case, if a support level is broken is usually acts as a resistance level when that level comes back into play.
In the case of AI, the 20.50 level acted as major support in the past with the stock price bouncing long this level many times until it finally broke. After finding another weaker level of support, if has come back up to 20.50 again. Given the above is often true, the highest probability trade here would be a bearish one as the price has a higher chance of reject this support level turned resistance.
This also gives you a clear way to set your risk management. If price breaks through this resistance then your stop can be set right around that 21.50 mark, or somewhere in the ballpark of a 25% loss, depending on your risk tolerance. Sometimes…
Watch the full video breakdown at WEALTHPOP.com