Shanda Games Short term Bullish Reversal

Published on Thursday, 19 January 2012 04:39 Written by Danny Miller

New York, January 19th (TradersHuddle.com) - Shares of Shanda Games Limited (NASDAQ:GAME) ended the trading session higher by $0.2 or 4.48% from its previous close. Shanda Games' 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.

Shanda Games Limited (NASDAQ:GAME) is an online game developer, operator and publisher in China. Shanda Games offers a diversified game portfolio, which includes some of the most popular massively multiplayer online role-playing games and advanced casual games in China, targeting a large and diverse community of users. Shanda Games manages and operates online games that are developed in-house, co-developed with world-leading game developers, acquired through investments or licensed from third parties.

Shanda Games' recent stock range has been formed by a trough where calculated support was defined at $3.93 and by a peak that established the resistance level at $4.28, which could be used by traders planning their trades.

Traders wanting to establish a position in Shanda Games 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: