LSI Formed a Hammer Candlestick Pattern
Published on Tuesday, 21 August 2012 04:36 Written by TradersHuddle Wire
New York, August 21st (TradersHuddle.com) - Shares of LSI Corporation (NYSE:LSI) ended the trading session lower by $0.14 or -1.78% from its previous close. LSI's price action in the session formed what is considered to be a Hammer, where bears drove prices lower intraday. However, the strong finish indicates that bulls regained control, forming a trend reversal.
LSI Corporation (NYSE:LSI) develops, manufactures, and markets integrated circuits and storage systems. The Company offers products and services for a variety of electronic systems applications that are marketed to original equipment manufacturers in the networking, telecommunications and wireless, computers, consumer products, and storage industries.
LSI's stock has been trading in a well defined range with calculated support at $6.51 and resistance at $7.93. This range can be used by traders to plan their next moves.
Traders wanting to establish a position in LSI or traders that are already holding the stock can use the hammer formation to their advantage, since the pattern signal a potential bullish trend reversal.
The Hammer is an important candlestick pattern, as it can mark bottoms and support levels. Further buying pressure, and preferably on expanding volume, is needed before acting, as heavy volume will serve to confirm the validity of the reversal.
In the case of LSI, traders who want to add to their positions or start a new position, need to watch for confirmation of the reversal. Below a Hammer illustration:
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