Trading Idea - Intel A Hammer Formed

Published on Tuesday, 27 July 2010 02:18 Written by TradersHuddle Staff

New York, July 27th (TradersHuddle.com) - Shares of Intel Corporation (NASDAQ:INTC) ended the trading session higher by $0.02 or 0.09% from its previous close. Intel'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.

Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, and other computer related components. The largest chipmaker in the world was founded in 1968 and is based in Santa Clara, CA.

Intel's stock has been trading in a well defined range with support at $18.96 and resistance at $21.98, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Intel 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 Intel, 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: