Brown-Forman Upside Looming?

Published on Wednesday, 25 August 2010 02:36 Written by Christian Paolinetti

New York, August 25th (TradersHuddle.com) - Shares of Brown-Forman Corporation (NYSE:BF.B) ended the trading session higher by $0.35 or 0.57% from its previous close. Brown-Forman'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.

Brown-Forman Corporation (NYSE:BF.B) manufactures, bottles, imports, exports, and markets alcoholic beverage. It offers consumer beverage alcohol products, including Tennessee, Canadian, and Kentucky whiskeys; Kentucky bourbon; tequila; vodka; liqueurs; California sparkling wine; table wine; and ready-to-drink products. The company provides its products under mnay brands, including Jack Daniel's Tennessee Whiskey, Herradura Tequila, Finlandia Vodka, Sonoma-Cutrer Wines, el Jimador Tequila, and Woodford Reserve Bourbon. and Fetzer Wines band names. Brown-Forman sell its products worldwide and is based in Louisville, Kentucky.

Brown-Forman's recent stock range has been formed by a trough where calculated support was defined at $59.99 and by a peak that established the resistance level at $65.05, which could be used by traders planning their trades.

Traders wanting to establish a position in Brown-Forman 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: