Sonic - Bears taking control?

Published on Tuesday, 17 January 2012 04:57 Written by Christian Paolinetti

New York, January 17th (TradersHuddle.com) - Sonic Corp. (NASDAQ:SONC) shares closed the session lower by $0.02 or -0.3% from its previous close. Sonic'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.

Sonic Corp. (NASDAQ:SONC) franchises and operates a chain of drive-in restaurants. The Company currently has Company-owned and franchised restaurants, principally in the south central and southeastern United States. Its restaurants offer made-to-order hamburgers and other sandwiches, as well as signature items.

Sonic's stock has been a defined range with support at $6.50 and resistance at $6.94, 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 Sonic 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: