Bullish Reversal Pattern - Sempra Energy

Published on Thursday, 19 January 2012 18:21 Written by Christian Paolinetti

New York, January 19th (TradersHuddle.com) - Shares of Sempra Energy (NYSE:SRE) ended the trading session higher by $0.1 or 0.18% from its previous close. Sempra Energy'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.

Sempra Energy (NYSE:SRE) is an energy services holding company with operations throughout the United States, Mexico, and other countries in South America. The Company, through its subsidiaries, generates electricity, delivers natural gas, operates natural gas pipelines and storage facilities, and operates a wind power generation project.

Sempra Energy's stock has been trading in a well defined range with support at $50.53 and resistance at $56.36, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Sempra Energy 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 Sempra Energy, 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: