Range Tightening in SkyWest

Published on Friday, 12 March 2010 08:24 Written by Christopher Lynn

New York, March 12th (TradersHuddle.com) - Shares of SkyWest, Inc. (NASDAQ:SKYW) closed the trading session at $14.93 placing the price action in a very tight range, given that calculated support is set at $14.54 and the calculated resistance based on an algorithm of peaks and troughs is set at $15.27

SkyWest, Inc. (NASDAQ:SKYW) operates regional airlines that offer scheduled passenger service to destinations in the United States, Canada, Mexico and the Caribbean.The company operates flights for major airlines like Delta and United

SkyWest's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to SkyWest's price action, as any movement outside its predefined range of $14.54 and $15.27 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $14.54 could spark above average selling. A tiered approach can be a good way to approach starting a position in SkyWest's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.