ITT Short term Bullish Reversal

Published on Thursday, 26 January 2012 04:18 Written by Christopher Lynn

New York, January 26th (TradersHuddle.com) - Shares of ITT Corporation (NYSE:ITT) ended the trading session higher by $0.38 or 1.8% from its previous close. ITT'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.

ITT Corporation (NYSE:ITT) designs and manufactures a variety of engineered products. The Company produces pumps, systems, and services to measure and control water and other fluids. ITT also supplies military defense systems, including night vision devices, secure communication systems, and avionics, in addition to providing electrical interconnects, and data storage and PC cards.

ITT's recent stock range has been formed by a trough where calculated support was defined at $21.04 and by a peak that established the resistance level at $22.34, which could be used by traders planning their trades.

Traders wanting to establish a position in ITT 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: