A Bullish Reversal Pattern for United Natural Foods

Published on Thursday, 03 January 2013 04:27 Written by TradersHuddle Wire

New York, January 3rd (TradersHuddle.com) - Shares of United Natural Foods, Inc. (NASDAQ:UNFI) ended the trading session higher by $0.49 or 0.91% from its previous close. United Natural'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.

United Natural Foods, Inc. (NASDAQ:UNFI) is an independent national distributor of natural and specialty foods and related products. The Company offers natural products consisting of groceries and general merchandise, nutritional supplements, bulk and foodservice products, personal care items, perishables, and frozen foods.

United Natural's stock has been trading in a well defined range with calculated support at $53.00 and resistance at $56.01. This range can be used by traders to plan their next moves.

Traders wanting to establish a position in United Natural Foods 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 United Natural Foods, 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: