Trading Idea - Is Peabody close to Resistance?

Published on Thursday, 11 March 2010 08:20 Written by Christian Paolinetti

New York, March 11th (TradersHuddle.com) - Shares of Peabody Energy Corp (NYSE:BTU) are trading very close to calculated resistance at $49.70 with the current price action closing at just $48.53 placing the stock near levels that make it difficult to buy.

Peabody Energy Corp. (NYSE:BTU) principal activities are mining, preparation and sale of steam coal, sold primarily to electric utilities and metallurgical coal, sold to steel and coke producers. The company?s other energy related businesses include the development of mine-mouth coal-fueled generating plants, the management of its vast coal reserves and real estate holdings, coalbed methane production and transportation services.

Peabody's current stock range is defined by current calculated support defined at $43.70 and by the resistance level at $49.70, the stock is clearly over-extended from support, making it difficult to establishing new long positions at this level.

Traders don't have a clear entry point for Peabody, as the stock is well above support, however, as the stock pulls back towards $43.70 it will definitely provide a reference point to establish a trade. On the other hand if the stock decides to break above resistance level at $49.70 then traders will get an opportunity to enter Peabody stock by establishing a position as the stock moves to a higher range.