Bottom Fishing on eBay
Published on Thursday, 04 October 2012 04:15 Written by TradersHuddle Wire
New York, October 4th (TradersHuddle.com) - Shares of eBay Inc. (NASDAQ:EBAY) ended the trading session higher by $0.19 or 0.39% from its previous close. eBay'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.
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 stock has been trading in a well defined range with calculated support at $47.36 and resistance at $50.65. This range can be used by traders to plan their next moves.
Traders wanting to establish a position in eBay 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 eBay, 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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