American Eagle Outfitters Bullish Engulfing Formed

Published on Tuesday, 18 December 2012 04:54 Written by TradersHuddle Wire

New York, December 18th (TradersHuddle.com) - Shares of American Eagle Outfitters, Inc. (NYSE:AEO) ended the trading session higher by $0.09 or 0.44% from its previous close. American Eagle's price action formed what is considered to be a bullish engulfing candle that could very well signal a continuation of trend or reversal of the ongoing weakness.

American Eagle Outfitters, Inc. (NYSE:AEO) retails men's and women's casual apparel, footwear, outerwear, and accessories. The company operates stores in the United States.

American Eagle's recent stock range was formed by a trough where calculated support was defined at $18.31 and by a peak that established the resistance level at $21.63. This range could be used by traders managing their positions.

Traders wanting to establish a position in American Eagle Outfitters or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk, as it shows where the bears were able to push the stock down, before the bulls step in with a bid.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short-term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration: