Neutral Short Term Pattern on Whole Foods

Published on Wednesday, 20 June 2012 04:15 Written by TradersHuddle Wire

New York, June 20th (TradersHuddle.com) - Shares of Whole Foods Market, Inc. (NASDAQ:WFM) closed the trading day higher by $0.13 or 0.14% from its previous close. Whole Foods' price action formed what is considered to be a doji close, where the open and close prices are very close to each other, mainly signaling an indecision between buyers and sellers.

Whole Foods Market, Inc. (NASDAQ:WFM) owns and operates a chain of natural food supermarkets in the United States. The Austin based company markets a full range of natural and organic merchandise, featuring products that are free of artificial flavors, sweeteners, colors, preservatives, and added chemicals.

Whole Foods' trading range is defined by a trough, which marked calculated support at $84.51 and by a peak that set the resistance point at $92.00. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in Whole Foods or traders that are already holding the stock can use the doji close to their advantage, since the pattern present a short-term pause in the stock's price action. This pause results in an entry point for traders depending of which way the stock resolves this short-term indecision.

The Doji is an important candlestick pattern that provides information on their own and as components in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation. In the case of Whole Foods , given that the stock finished the session higher, bulls should monitor their positions for confirmation that the stock will continue higher by taking its intraday high. Below a Doji illustration: