Bulls taking Control - Taiwan Semiconductor?

Published on Friday, 09 December 2011 18:09 Written by TradersHuddle Staff

New York, December 9th (TradersHuddle.com) - Shares of Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) ended the trading session higher by $0.14 or 1.08% from its previous close. Taiwan Semiconductor's price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) manufactures integrated circuits based on its proprietary designs. The Company offers a comprehensive set of integrated circuit fabrication processes to manufacture CMOS logic, mixed-mode, volatile and non-volatile memory and BiCMOS chips. Taiwan Semiconductor is an affiliate of Philips Electronics N.V.

Taiwan Semiconductor's recent stock range has been formed by a trough where calculated support was defined at $12 and by a peak that established the resistance level at $13.36, which could be used by traders planning their trades.

Traders wanting to establish a position in Taiwan Semiconductor or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: