Trading Idea - Raytheon A Hammer Formed

Published on Thursday, 09 September 2010 01:57 Written by TradersHuddle Staff

New York, September 9th (TradersHuddle.com) - Shares of Raytheon Company (NYSE:RTN) ended the trading session lower by $0.36 or -0.79% from its previous close. Raytheon'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.

Raytheon Company (NYSE:RTN) is a technology firm specializing in defense, homeland security and other government markets. Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services.

Raytheon's stock has been trading in a well defined range with support at $42.65 and resistance at $46.26, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Raytheon 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 Raytheon, 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: