Bulls Gaining Control of Youku
Published on Thursday, 31 May 2012 04:12 Written by TradersHuddle Wire
New York, May 31st (TradersHuddle.com) - Shares of Youku Inc. (NYSE:YOKU) ended the trading session lower by $0.39 or -1.55% from its previous close. Youku's price action in the 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.
Youku Inc. (NYSE:YOKU) is the leading Internet television company in China, providing online video content for Chinese internet users across all Internet-enabled devices. The company offers a combination of licensed professional content, user-generated content and self-produced web video content.
Youku's stock has been trading in a well defined range with calculated support at $19.47 and resistance at $25.12. This range can be used by traders to plan their next moves.
Traders wanting to establish a position in Youku 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.
The Hammer is an important candlestick pattern, as it can 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 Youku, 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:
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