Is this a Reversal Pattern for Cabot Oil & Gas ?

Published on Friday, 03 September 2010 08:06 Written by TradersHuddle Staff

New York, September 3rd (TradersHuddle.com) - Shares of Cabot Oil & Gas Corporation (NYSE:COG) ended the trading session higher by $0.12 or 0.42% from its previous close. Cabot'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.

Cabot Oil & Gas Corporation (NYSE:COG) is an independent oil and gas company that develops, explores, and extracts oil and gas in properties located in North America. The Company holds interests Appalachian Basin, onshore Gulf Coast, including south and east Texas and north Louisiana, the Rocky Mountains and the Anadarko Basin as well as in the deep gas basin of Western Canada.

Cabot's stock has been trading in a well defined range with support at $27.41 and resistance at $29.35, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Cabot Oil & Gas 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 Cabot Oil & Gas, 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: