Bulls and Bears on the Trenches of Bank of America

Published on Tuesday, 31 July 2012 04:42 Written by TradersHuddle Wire

New York, July 31st (TradersHuddle.com) - Shares of Bank of America Corporation (NYSE:BAC) closed the trading day lower by $0.03 or -0.41% from its previous close. Bank of America's 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.

Bank of America Corporation (NYSE:BAC) offers banking, investing, asset management, and other financial and risk-management products and services. The Company has a mortgage lending subsidiary, and an investment banking and securities brokerage subsidiary. Bank of America, the biggest U.S. lender, has a very extensive network of retail banking locations in the U.S. The Bank was founded in 1874 and its headquartered in Charlotte, NC.

Bank of America's trading range is defined by a trough, which marked calculated support at $6.90 and by a peak that set the resistance point at $7.40. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in Bank of America 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 Bank of America, given that the stock finished the session lower, bears should monitor the stock, as it could reverse if it manages to trade above its intraday high. Below a Doji illustration: