Dow Bullish Signs

Published on Tuesday, 22 May 2012 07:45 Written by TradersHuddle Wire

New York, May 22nd (TradersHuddle.com) - Shares of Dow Chemical Company (NYSE:DOW) ended the trading session higher by $1.09 or 3.7% from its previous close. Dow's price action formed what is considered to be a bullish engulfing candle that could very well signal a continuation of trend or reversal of the 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 was formed by a trough where calculated support was defined at $31.58 and by a peak that established the resistance level at $36.08. This range could be used by traders managing their positions.

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 step in with a bid.

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: