Capital One Upside Looming?

Published on Thursday, 09 February 2012 04:42 Written by TradersHuddle Wire

New York, February 9th (TradersHuddle.com) - Shares of Capital One Financial Corporation (NYSE:COF) ended the trading session higher by $1.09 or 2.3% from its previous close. Capital One'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.

Capital One Financial Corporation (NYSE:COF) is a diversified bank. The Bank, through its subsidiaries, offers a broad spectrum of financial products and services, like credit cards and car loans to consumers, small businesses and commercial clients both domestically and internationally. Headquartered in McLean, Virginia, Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia.

Capital One's recent stock range has been formed by a trough where calculated support was defined at $44.65 and by a peak that established the resistance level at $49.93, which could be used by traders planning their trades.

Traders wanting to establish a position in Capital One 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: