Coldwater Creek: Traders Look for a Bottom

cwtr New York, October 18th (TradersHuddle.com) - Shares of Coldwater Creek Inc. (NASDAQ:CWTR) ended the trading session lower by $0.1 or -2.66% from its previous close. Coldwater Creek'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.

Coldwater Creek Inc. (NASDAQ:CWTR) is a specialty direct mail retailer of apparel, gifts, jewelry, and home furnishings. The Company markets its merchandise primarily through catalogs, including Northcountry, Spirit of the West, Natural Elements, and Home.

Coldwater Creek's stock has been trading in a well defined range with calculated support at $3.80 and resistance at $4.36. This range can be used by traders to plan their next moves.

Traders wanting to establish a position in Coldwater Creek 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 Coldwater Creek, 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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