Cabot Oil & Gas Bullish Engulfing Formed

Published on Wednesday, 21 July 2010 02:18 Written by Christian Paolinetti

New York, July 21st (TradersHuddle.com) - Shares of Cabot Oil & Gas Corporation (NYSE:COG) ended the trading session higher by $1.31 or 4.11% from its previous close. Cabot's price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

Cabot Oil & Gas Corporation (NYSE:COG) is an independent oil and gas company that develops, explores, and extracts oil and gas in properties located in North America. The Company holds interests Appalachian Basin, onshore Gulf Coast, including south and east Texas and north Louisiana, the Rocky Mountains and the Anadarko Basin as well as in the deep gas basin of Western Canada.

Cabot's recent stock range has been formed by a trough where calculated support was defined at $30.01 and by a peak that established the resistance level at $33.96, which could be used by traders planning their trades.

Traders wanting to establish a position in Cabot Oil & Gas or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: