Rite Aid Formed a Tweezer Top

Published on Wednesday, 08 September 2010 07:54 Written by Christian Paolinetti

New York, September 8th (TradersHuddle.com) - Rite Aid Corporation (NYSE:RAD) shares closed the session flat by $0 or 0.18% from its previous close. Rite Aid's latest price action developed a short term reversal pattern in the form of a tweezer top, which is a candlestick pattern that is usually formed at the end of a uptrend. Given that the tweezer top is considered a reversal pattern, traders with long positions need to monitor stock price action for confirmation of weakness and plan position accordingly.

Rite Aid Corporation (NYSE:RAD) operates a retail drugstore chain across various States. The stores sell prescription drugs, nonprescription medications, health aids, cosmetics, and other consumer products.

Rite Aid's stock has been a defined range with support at $0.86 and resistance at $0.98, which can be used by traders managing their trades, given the possibility of short term weakness in the stock.

Tweezer tops are exactly the opposite of tweezer bottoms, as they define a resistance point for Rite Aid that needs to be digested prior to the stock price to move higher.

Tweezer tops can be formed at the end of an uptrend, at a clear horizontal resistance point, or within a downtrend when price action is dealing with the declining resistance trend. Like any other candlestick pattern it needs confirmation by trading below the previous day low. Below an example of Tweezer Top reversal patterns: