Rackspace Short term Bullish Reversal

Published on Wednesday, 28 December 2011 00:18 Written by Danny Miller

New York, December 28th (TradersHuddle.com) - Shares of Rackspace Hosting, Inc. (NYSE:RAX) ended the trading session higher by $0.59 or 1.36% from its previous close. Rackspace'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.

Rackspace Hosting, Inc. (NYSE:RAX) operates in the hosting and cloud computing industry. It provides managing Web-based IT systems for small and medium-sized businesses, as well as large enterprises worldwide. Its service suite includes dedicated hosting comprising managed hosting service that manages data center, network, hardware devices, and operating system software; private cloud service, which enables large enterprises to virtualize their IT environments.

Rackspace's recent stock range has been formed by a trough where calculated support was defined at $42.61 and by a peak that established the resistance level at $45.45, which could be used by traders planning their trades.

Traders wanting to establish a position in Rackspace 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: