Wal-Mart Upside Looming?

Published on Wednesday, 18 January 2012 18:30 Written by Danny Miller

New York, January 18th (TradersHuddle.com) - Shares of Wal-Mart Stores, Inc. (NYSE:WMT) ended the trading session higher by $0.16 or 0.27% from its previous close. Wal-Mart's price action formed what is considered to be a bullish engulfing candle that could very well signal continuation of trend or reversal on ongoing weakness.

Wal-Mart Stores, Inc. (NYSE:WMT) operates discount stores, supercenters, warehouse membership clubs, and neighborhood markets. The Company's stores sale products like general merchandise, apparel, electronics and groceries. Wal-Mart operates the warehouse membership stores under the Sam's Club name, where the company sell assorted merchandise including its private label products. Wal-Mart was founded by Sam Walton in 1945 and is based in Bentonville, Arkansas.

Wal-Mart's recent stock range has been formed by a trough where calculated support was defined at $56.32 and by a peak that established the resistance level at $61.06, which could be used by traders planning their trades.

Traders wanting to establish a position in Wal-Mart or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk as it shows where the bears were able to push the stock down, before the bulls stepped in.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: