JDS Uniphase - Traders Looking for a Bottom

Published on Thursday, 05 January 2012 04:57 Written by Christopher Lynn

New York, January 5th (TradersHuddle.com) - Shares of JDS Uniphase Corporation (NASDAQ:JDSU) ended the trading session lower by $0.16 or -1.48% from its previous close. JDS Uniphase's price action in today's session formed what is considered to be a Hammer, where bears drove prices lower intraday. However, the strong finish indicates that bulls regained control forming a trend reversal.

JDS Uniphase Corporation (NASDAQ:JDSU) provides communications test and measurement solutions and optical products for telecommunications service providers, cable operators, and network equipment manufacturers. The Company also provides optical solutions for medical/environmental instrumentation, semiconductor processing, display, brand authentication, aerospace and defense.

JDS Uniphase's stock has been trading in a well defined range with support at $9.22 and resistance at $11.10, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in JDS Uniphase or traders that are already holding the stock can use the hammer formation to their advantage, since the pattern signal a potential bullish trend reversal.

Hammers are important candlesticks as they mark bottoms and support levels. Further buying pressure, and preferably on expanding volume, is needed before acting, as heavy volume will serve to confirm the validity of the reversal.

In the case of JDS Uniphase, traders who want to add to their positions or start a new position, need to watch for confirmation of the reversal. Below a Hammer illustration: