New York, May 9th (TradersHuddle.com) - Tellabs, Inc. (NASDAQ:TLAB) closed the trading session lower by $0.03 or -1.4% from its previous close. The latest price action developed a short term reversal pattern in the form of a tweezer top, which is a candlestick pattern that is usually formed at the end of an uptrend. Given that the tweezer top is considered a reversal pattern, traders with long positions need to monitor the price action for confirmation of weakness, and plan the position accordingly.
Tellabs, Inc. (NASDAQ:TLAB) designs, manufactures, sells, and services voice, data, and video transport and network access systems. The Company's products are used worldwide by public telephone companies, long-distance carriers, alternate service providers, cellular service providers, cable operators.
Tellabs' stock has been in a defined range with calculated support at $1.90 and resistance at $2.07. Given the possibility of short-term weakness in the stock's price, this range could be used by traders managing their positions.
Tweezer tops are exactly the opposite of tweezer bottoms, as they define a resistance point for Tellabs that needs to be digested prior for the stock to move to a higher level.
Tweezer tops can be formed at the end of an uptrend, at a clear horizontal resistance point, or within a downtrend when price action is dealing with the declining resistance trend. Like any other candlestick pattern, it needs confirmation by trading below the previous day low. Below there is an example of the Tweezer Top reversal pattern: