Bulls taking Control - Smithfield Foods?

Published on Thursday, 19 August 2010 01:21 Written by Christian Paolinetti

New York, August 19th (TradersHuddle.com) - Shares of Smithfield Foods, Inc. (NYSE:SFD) ended the trading session higher by $0.45 or 3.04% from its previous close. Smithfield Foods' 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.

Smithfield Foods, Inc. (NYSE:SFD) engages in the production and marketing of fresh meat and packaged meat products. The company processes pork and produces hogs through its meat processing and hog production groups. Smithfield also produces and markets a range of branded food products such as frozen barbecues and chilies, peanuts, and pork products.

Smithfield Foods' recent stock range has been formed by a trough where calculated support was defined at $14.04 and by a peak that established the resistance level at $15.44, which could be used by traders planning their trades.

Traders wanting to establish a position in Smithfield Foods 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: