American Electric Power - Bulls taking control?

Published on Tuesday, 17 August 2010 01:48 Written by Christian Paolinetti

New York, August 17th (TradersHuddle.com) - Shares of American Electric Power Co., Inc. (NYSE:AEP) ended the trading session higher by $0.21 or 0.59% from its previous close. American Electric Power's price action developed what can be considered a reversal pattern in the form of a tweezer bottom, which is a candlestick pattern that is usually formed at the end of a downtrend. The tweezer bottom is considered a reversal pattern, so traders will need to monitor the the price action for confirmation.

American Electric Power Company, Inc.(NYSE:AEP) provides electric service, consisting of generation, transmission and distribution, on an integrated basis to their retail customers. AEP serves portions of the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.

Traders looking for an entry in American Electric Power can use the tweezers as a good reference point to establish the long position, as the pattern provides defined risk by giving a good reference point for support.

Traders are always looking for tweezer bottoms as they give an entry with a small risk defined, they are a leading indicator that provides an alert for a trend reversal or stabilization. The tweezers imply that bears or sellers were not able to push the stock lower, therefore providing the opportunity to look for a bounce. Below an example of Tweezer Bottom reversal patterns: