Below Support- AES

Published on Friday, 24 June 2011 07:08 Written by Danny Miller

New York, June 24th (TradersHuddle.com) - Shares of AES Corporation (NYSE:AES) closed the trading session at $12.21 below calculated support at $12.23 breaking current long setups, raising concerns by the bulls, as this move might give the bears the upper hand.

AES Corporation (NYSE:AES), together with its subsidiaries, engages in the generation and distribution of electricity in Asia, North America, Europe, Latin America, and Africa. The Company sells electricity under long term contracts and serves customers under its regulated utility businesses.The company generates electricity through various resources, including coal, gas, and fuel oil, as well as hydro, wind, and solar.

AES's stock was trading in a well defined range with support at $12.23 and resistance at $13.00; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that AES's stock is still near the broken support, traders will be focusing on $12.23 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in AES can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $12.23. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.