Bulls taking Control - Buckeye?

Published on Thursday, 05 January 2012 04:48 Written by Christopher Lynn

New York, January 5th (TradersHuddle.com) - Shares of Buckeye Technologies Inc. (NYSE:BKI) ended the trading session higher by $0.69 or 2.01% from its previous close. Buckeye'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.

Buckeye Technologies Inc. (NYSE:BKI) is a leading producer of cellulose-based specialty products. Buckeye is the only manufacturer in the world offering cellulose-based specialty products made from both wood and cotton and utilizing wetlaid and airlaid technologies. It operates manufacturing facilities in the United States, Canada, Germany and Brazil. Its product lines are grouped into four categories: chemical cellulose, customized fibers, fluff pulp and nonwoven materials. It manages these products within two reporting segments: specialty fibers and nonwoven materials. The chemical cellulose and customized fibers are derived from wood and cotton cellulose materials using wetlaid technologies. Fluff pulps are derived from wood using wetlaid technology. Wetlaid technologies consists of cellulose manufacturing processes, in which fibers are deposited using water.

Buckeye's recent stock range has been formed by a trough where calculated support was defined at $29.90 and by a peak that established the resistance level at $34.61, which could be used by traders planning their trades.

Traders wanting to establish a position in Buckeye 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: