LDK Solar - Bears taking control?

Published on Thursday, 01 December 2011 04:57 Written by Christopher Lynn

New York, December 1st (TradersHuddle.com) - LDK Solar Co. Ltd. (NYSE:LDK) shares closed the session higher by $0.16 or 4.72% from its previous close. LDK Solar'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.

LDK Solar Co. Ltd. (NYSE:LDK) is a manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK sells multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. In addition, the company provides wafering services to monocrystalline and multicrystalline solar cell and module manufacturers.

LDK Solar's stock has been a defined range with support at $2.57 and resistance at $3.19, 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 LDK Solar 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: