Tweezer Top Pattern in Watsco

Published on Tuesday, 19 June 2012 04:09 Written by TradersHuddle Wire

New York, June 19th (TradersHuddle.com) - Watsco, Inc. (NYSE:WSO) closed the trading session higher by $0.39 or 0.53% from its previous close. The latest price action developed a short term reversal pattern in the form of a tweezer top, which is a candlestick pattern that is usually formed at the end of an uptrend. Given that the tweezer top is considered a reversal pattern, traders with long positions need to monitor the price action for confirmation of weakness, and plan the position accordingly.

Watsco, Inc. (NYSE:WSO) distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies. The Company operates various locations in the United States, with primary markets in the Sunbelt.

Watsco's stock has been in a defined range with calculated support at $69.49 and resistance at $74.54. Given the possibility of short-term weakness in the stock's price, this range could be used by traders managing their positions.

Tweezer tops are exactly the opposite of tweezer bottoms, as they define a resistance point for Watsco that needs to be digested prior for the stock to move to a higher level.

Tweezer tops can be formed at the end of an uptrend, at a clear horizontal resistance point, or within a downtrend when price action is dealing with the declining resistance trend. Like any other candlestick pattern, it needs confirmation by trading below the previous day low. Below there is an example of the Tweezer Top reversal pattern: