Schnitzer Steel Formed a Tweezer Bottom

Published on Monday, 23 July 2012 04:03 Written by TradersHuddle Wire

New York, July 23rd (TradersHuddle.com) - Shares of Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) ended the trading session lower by $0.65 or -2.2% from its previous close. Schnitzer'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.

Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) operates a steel scrap recycling business in the United States. The Company supplies ferrous scrap to export and domestic steel producers through its scrap collection, processing, and deep water facilities. Schnitzer also operates collection and processing facilities, as well as manages other facilities through joint ventures. Schnitzer is one of the largest recyclers of scrap metal in the U.S., and a leading provider of used and recycled auto parts.

Traders looking for an entry in Schnitzer Steel 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: