Shares of Humana Bottoming out?

Published on Friday, 03 September 2010 07:57 Written by Christopher Lynn

New York, September 3rd (TradersHuddle.com) - Shares of Humana, Inc. (NYSE:HUM) ended the trading session higher by $0.26 or 0.52% from its previous close. Humana's 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.

Humana Inc. (NYSE:HUM), a managed health care company, offers coordinated health care through health maintenance organizations, preferred provider organizations, point-of-service plans, and administrative services products. Humana offers its products to employer groups, government-sponsored plans, and individuals in the United States and Puerto Rico.

Humana's stock has been trading in a well defined range with support at $47.21 and resistance at $51.24, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Humana 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 Humana, 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: