ADP - Bears taking control?

Published on Monday, 16 January 2012 20:18 Written by Christian Paolinetti

New York, January 16th (TradersHuddle.com) - Automatic Data Processing, Inc. (NYSE:ADP) shares closed the session lower by $0.01 or -0.02% from its previous close. ADP's latest price action developed a short term reversal pattern in the form of a tweezer top, which is a candlestick pattern that is usually formed at the end of a uptrend. Given that the tweezer top is considered a reversal pattern, traders with long positions need to monitor stock price action for confirmation of weakness and plan position accordingly.

Automatic Data Processing, Inc. (NYSE:ADP) is a global provider of business outsourcing solutions. The Company's services include a wide range of human resource, payroll, tax and benefits administration solutions. Automatic Data also provides solutions to auto, truck, motorcycle, marine and recreational vehicle dealers. Its solutions enable employers to staff, manage, pay, and retain their employees in the United States, Canada, Europe, South America, Australia, and Asia. The Professional Employer Organization Services segment provides employment administration outsourcing solutions, including payroll, payroll tax filing, HR guidance, and 401(k) plan administration for employees primarily in the United States.

ADP's stock has been a defined range with support at $47.60 and resistance at $55.00, which can be used by traders managing their trades, given the possibility of short term weakness in the stock.

Tweezer tops are exactly the opposite of tweezer bottoms, as they define a resistance point for ADP that needs to be digested prior to the stock price to move higher.

Tweezer tops can be formed at the end of an uptrend, at a clear horizontal resistance point, or within a downtrend when price action is dealing with the declining resistance trend. Like any other candlestick pattern it needs confirmation by trading below the previous day low. Below an example of Tweezer Top reversal patterns: