Neutral Short Term Pattern on ITT

Published on Monday, 05 December 2011 18:12 Written by Christopher Lynn

New York, December 5th (TradersHuddle.com) - Shares of ITT Corporation (NYSE:ITT) closed the trading day higher by $0.29 or 1.46% from its previous close. ITT's shares price action formed what is considered to be a doji close, where the open and close prices are very close to each other, mainly signaling an indecision between buyers and sellers.

ITT Corporation (NYSE:ITT) designs and manufactures a variety of engineered products. The Company produces pumps, systems, and services to measure and control water and other fluids. ITT also supplies military defense systems, including night vision devices, secure communication systems, and avionics, in addition to providing electrical interconnects, and data storage and PC cards.

ITT's current stock range is defined by a trough, which marks calculated support at $18.84 and by a peak that marked the resistance point at $20.34. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in ITT or traders that are already holding the stock can use the doji close to their advantage, since the pattern present a short term pause in the stock's price action. This pause results in an entry point for traders depending of which way the stock resolves this short term indecision.

Doji are important candlesticks that provide information on their own and as components in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation. In the case of ITT, given that the stock finished the session higher, bulls should monitor their positions for confirmation that stock will continue higher by taking today's intraday high. Below a Doji illustration: