ADP Bullish Engulfing Formed

Published on Monday, 16 August 2010 18:21 Written by Danny Miller

New York, August 16th (TradersHuddle.com) - Shares of Automatic Data Processing, Inc. (NYSE:ADP) ended the trading session higher by $0.28 or 0.7% from its previous close. ADP'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.

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 recent stock range has been formed by a trough where calculated support was defined at $39.08 and by a peak that established the resistance level at $42.46, which could be used by traders planning their trades.

Traders wanting to establish a position in ADP 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: