Is this a Reversal Pattern for Nash Finch ?

Published on Friday, 13 January 2012 05:06 Written by Danny Miller

New York, January 13th (TradersHuddle.com) - Shares of Nash Finch Company (NASDAQ:NAFC) ended the trading session higher by $0.08 or 0.28% from its previous close. Nash Finch'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.

Nash Finch Company (NASDAQ:NAFC) is a food distributor that supplies products to independent supermarkets and military bases in the United States. The Company also owns and operates retail stores, principally supermarkets under the Econofoods, AVANZA, Family Thrift Center, Pickn Save, and Sun Mart trade names.

Nash Finch's stock has been trading in a well defined range with support at $28.46 and resistance at $30.55, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Nash Finch 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 Nash Finch, 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: