Bullish Reversal Pattern - Chiquita Brands

Published on Monday, 23 August 2010 08:21 Written by Christian Paolinetti

New York, August 23rd (TradersHuddle.com) - Shares of Chiquita Brands International, Inc. (NYSE:CQB) ended the trading session lower by $0.06 or -0.46% from its previous close. Chiquita Brands' 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.

Chiquita Brands International, Inc. (NYSE:CQB) markets, produces, and distributes fresh bananas and other fresh produce. The Company also distributes and markets fresh-cut fruit and other branded fruit products.

Chiquita Brands' stock has been trading in a well defined range with support at $13.06 and resistance at $13.75, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Chiquita Brands 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 Chiquita Brands, 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: