Is ADP Reversing?

Published on Wednesday, 23 June 2010 18:57 Written by Christopher Lynn

New York, June 23rd (TradersHuddle.com) - Shares of Automatic Data Processing, Inc. (NYSE:ADP) closed the trading day lower by $0.08 or -0.19% from its previous close. ADP's shares price action formed what is considered to be a doji close, where the open and close prices are very close to each other, mainly signaling an indecision between buyers and sellers.

Automatic Data Processing, Inc. (NYSE:ADP) is a global provider of business outsourcing solutions. The Company's services include a wide range of human resource, payroll, tax and benefits administration solutions. Automatic Data also provides solutions to auto, truck, motorcycle, marine and recreational vehicle dealers. Its solutions enable employers to staff, manage, pay, and retain their employees in the United States, Canada, Europe, South America, Australia, and Asia. The Professional Employer Organization Services segment provides employment administration outsourcing solutions, including payroll, payroll tax filing, HR guidance, and 401(k) plan administration for employees primarily in the United States.

ADP's current stock range is defined by a trough, which marks calculated support at $39.90 and by a peak that marked the resistance point at $42.75. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in ADP or traders that are already holding the stock can use the doji close to their advantage, since the pattern present a short term pause in the stock's price action. This pause results in an entry point for traders depending of which way the stock resolves this short term indecision.

Doji are important candlesticks that provide information on their own and as components in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation. In the case of ADP, given that the stock finished the session lower, bears should monitor the stock, as it could reverse if it manages to trade above today's intraday high. Below a Doji illustration: