Plum Creek Timber - Traders Looking for a Bottom

Published on Thursday, 02 February 2012 17:54 Written by Danny Miller

New York, February 2nd (TradersHuddle.com) - Shares of Plum Creek Timber Company, Inc. (NYSE:PCL) ended the trading session higher by $0.16 or 0.41% from its previous close. Plum Creek'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.

Plum Creek Timber Company, Inc. (NYSE:PCL) grows, harvests, and markets timber and logs, and manufactures forest products such as lumber and plywood. The Company owns timberlands located in the United States. Plum Creek also owns natural resource businesses that focus on mineral extraction and natural gas production

Plum Creek's stock has been trading in a well defined range with support at $34.50 and resistance at $40.70, this range is also being used by traders to plan their positions.

Traders wanting to establish a position in Plum Creek Timber 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 Plum Creek Timber, 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: