AutoNation: Ready for some Upside?

Published on Saturday, 21 July 2012 00:45 Written by TradersHuddle Wire

New York, July 21st (TradersHuddle.com) - Shares of AutoNation, Inc. (NYSE:AN) ended the trading session lower by $1.17 or -2.87% from its previous close. AutoNation's price action developed what can be considered a reversal pattern in the form of a tweezer bottom, which is a candlestick pattern that is usually formed at the end of a downtrend. The tweezer bottom is considered a reversal pattern, so traders will need to monitor the price action for confirmation.

AutoNation, Inc. (NYSE:AN) retails, finances, and services new and used vehicles. The Company also provides other related services and products, such as the sale of parts and accessories, extended service contracts, aftermarket automotive products, and collision repair services.

Traders looking for an entry in AutoNation can use the tweezers as a good reference point to establish the long position, as the pattern provides defined risk by giving a good reference point for support.

Traders look for tweezer bottoms, as they provide an entry with a small defined risk. They are a leading indicator that provide an alert for a trend reversal or stabilization. The tweezers imply that bears or sellers were not able to push the stock lower, therefore providing the opportunity to look for a bounce. Below an example of a Tweezer Bottom reversal pattern: