Cardinal Health Bullish Engulfing Formed

Published on Wednesday, 25 August 2010 17:45 Written by Danny Miller

New York, August 25th (TradersHuddle.com) - Shares of Cardinal Health, Inc. (NYSE:CAH) ended the trading session higher by $1.01 or 3.36% from its previous close. Cardinal Health'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.

Cardinal Health, Inc. (NYSE:CAH) provides products and services to healthcare providers and manufacturers. Its services include pharmaceutical distribution, health-care product manufacturing, distribution and consulting services, drug delivery systems development, pharmaceutical packaging, automated dispensing systems manufacturing, and retail pharmacy franchising.

Cardinal Health's recent stock range has been formed by a trough where calculated support was defined at $30.60 and by a peak that established the resistance level at $33.51, which could be used by traders planning their trades.

Traders wanting to establish a position in Cardinal Health 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: