Bulls in Charge of eBay

Published on Sunday, 22 July 2012 10:51 Written by TradersHuddle Wire

New York, July 22nd (TradersHuddle.com) - Shares of eBay Inc. (NASDAQ:EBAY) ended the trading session higher by $1.19 or 2.71% from its previous close. eBay'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.

eBay Inc. (NASDAQ:EBAY) operates an online auction community. The service is used to buy and sell products and services such as coins, collectibles, computers, memorabilia, stamps and toys, and sporting tickets. eBay also offers, through its subsidiary PayPal, secure online payment services.

eBay's recent stock range was formed by a trough where calculated support was defined at $38.06 and by a peak that established the resistance level at $43.94. This range could be used by traders managing their positions.

Traders wanting to establish a position in eBay 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: