Trading Idea - IMAX Broke Support, What to Expect?

Published on Friday, 25 November 2011 08:48 Written by Danny Miller

New York, November 25th (TradersHuddle.com) - Shares of Imax Corporation (NASDAQ:IMAX) closed the trading session at $17.61 below calculated support at $18.17 breaking current long setups, raising concerns by the bulls, as this move might give the bears the upper hand.

Imax Corporation (NASDAQ:IMAX) specializes in motion picture technologies and large-format film presentations. The company designs and manufactures projection and sound systems for large-screen theaters and designs custom attractions, including motion simulation theaters, for both large-scale attractions and smaller venues.

IMAX's stock was trading in a well defined range with support at $18.17 and resistance at $19.72; 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 IMAX's stock is still near the broken support, traders will be focusing on $18.17 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in IMAX can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $18.17. 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.