Tweezer top in Allergan

Published on Monday, 23 January 2012 19:27 Written by Christopher Lynn

New York, January 23rd (TradersHuddle.com) - Allergan Inc. ( NYSE:AGN) shares closed the session higher by $1.59 or 1.81% from its previous close. Allergan'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.

Allergan, Inc. ( NYSE:AGN) is a multi-specialty health care company that develops and commercializes pharmaceuticals, biologics and medical devices. The company develops products for the ophthalmic, neurological, medical aesthetics, breast aesthetics, obesity intervention, urological and other specialty markets in countries around the world.

Allergan's stock has been a defined range with support at $78.42 and resistance at $88.81, 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 Allergan 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: