Trading Idea - AnnTaylor A Hammer Formed

Published on Monday, 26 July 2010 18:27 Written by TradersHuddle Staff

New York, July 26th (TradersHuddle.com) - Shares of AnnTaylor Stores Corporation (NYSE:ANN) ended the trading session higher by $0.15 or 0.85% from its previous close. AnnTaylor's price action in today's session formed what is considered to be a Hammer, where bears drove prices lower intraday. However, the strong finish indicates that bulls regained control forming a trend reversal.

AnnTaylor Stores Corporation (NYSE:ANN), through its wholly owned subsidiary, retails women's apparel, shoes, and accessories primarily under the Ann Taylor brand name.

AnnTaylor's stock has been trading in a well defined range with support at $15.14 and resistance at $17.78, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in AnnTaylor or traders that are already holding the stock can use the hammer formation to their advantage, since the pattern signal a potential bullish trend reversal.

Hammers are important candlesticks as they mark bottoms and support levels. Further buying pressure, and preferably on expanding volume, is needed before acting, as heavy volume will serve to confirm the validity of the reversal.

In the case of AnnTaylor, traders who want to add to their positions or start a new position, need to watch for confirmation of the reversal. Below a Hammer illustration: