Dow Upside Looming?

Published on Thursday, 09 February 2012 04:51 Written by TradersHuddle Wire

New York, February 9th (TradersHuddle.com) - Shares of Dow Chemical Company (NYSE:DOW) ended the trading session lower by $0.16 or -0.47% from its previous close. Dow'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.

Dow Chemical Company (NYSE:DOW) is a diversified chemical company that provides chemical, plastic, and agricultural products and services to various essential consumer markets. The company sell its products to food, transportation, health and medicine, personal care, and construction markets.

Dow's recent stock range has been formed by a trough where calculated support was defined at $25.23 and by a peak that established the resistance level at $34.45, which could be used by traders planning their trades.

Traders wanting to establish a position in Dow 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: