NVR Upside Looming?

Published on Tuesday, 31 January 2012 04:51 Written by Christian Paolinetti

New York, January 31st (TradersHuddle.com) - Shares of NVR, Inc. (NYSE:NVR) ended the trading session lower by $2.27 or -0.33% from its previous close. NVR'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.

NVR, Inc. (NYSE:NVR) builds and markets homes and conducts mortgage banking activities. The Company builds single-family detached homes, townhomes, and condominium buildings under the Ryan Homes, NVHomes, and other tradenames. NVR provides a number of mortgage related services to its homebuilding customers and to other customers through its mortgage banking operations.

NVR's recent stock range has been formed by a trough where calculated support was defined at $627.51 and by a peak that established the resistance level at $759.13, which could be used by traders planning their trades.

Traders wanting to establish a position in NVR 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: