Is this a Reversal Pattern for Allegheny ?

Published on Thursday, 05 January 2012 19:42 Written by Christopher Lynn

New York, January 5th (TradersHuddle.com) - Shares of Allegheny Technologies Inc. (NYSE:ATI) ended the trading session lower by $0.64 or -1.31% from its previous close. Allegheny'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.

Allegheny Technologies, Inc. (NYSE:ATI) manufactures and sells specialty metals worldwide. The Company's products include include titanium and titanium alloys, nickel-based alloys and superalloys, zirconium, hafnium and niobium, stainless and specialty steel alloys.

Allegheny's stock has been trading in a well defined range with support at $42.64 and resistance at $50.85, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Allegheny 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 Allegheny, 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: