Finnish handset maker Nokia (NOK) has been a consistent huge volume name in the last year, as big new items drive trading volume. But while plenty of shares of Nokia have changed hands in the last several months, they haven't gone anywhere. Instead, NOK has been trading sideways in a range since mid-September.
But that's exactly what makes this stock a high-probability trade right now. Here's how to trade it.NOK is forming a rectangle pattern, a price setup that's formed by a pair of horizontal resistance and support levels that basically "box in" shares between $8 and $6.50. Rectangles are "if/then patterns." Put a different way, if Nokia breaks out through resistance at $8, then traders have a buy signal. Otherwise, if Nokia violates support at $6.50, then the high-probability trade is a sell. There are some indications that NOK could be the latter: our momentum gauge, 14-day RSI, has been trending lower since the rectangle pattern started. That means down days are getting the better of up days in NOK, even as shares attempt to move higher. It's not a sell until $6.50 gets tripped, but if it does, look out below.
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