Cheesecake Factory Well Structured Setup

Published on Thursday, 08 December 2011 19:20 Written by Christopher Lynn

New York, December 8th (TradersHuddle.com) - Shares of The Cheesecake Factory Incorporated (NASDAQ:CAKE) closed the trading session at $27.97 near its 50 day and 200 day moving averages currently set at $27.04 and $28.75 respectively. Cheesecake Factory's price action is above the 50 day moving average but below its 200 day moving average, which provide a nice trading setup, with clear reference points.

The Cheesecake Factory Incorporated (NASDAQ:CAKE) operates casual dining restaurants under the name The Cheesecake Factory, Grand Lux Cafe, and RockSugar Pan Asian Kitchen. Its restaurants offer appetizers, sandwiches, pasta, various meats, and varieties of cheesecake. The Cheesecake Factory operates in the United States.

Cheesecake Factory price action seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter Cheesecake Factory with a small position and wait for the stock to break out above the 200 day moving average at $28.75, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 50 day moving average set at $27.04 breaks it could mean further downside in the horizon for Cheesecake Factory.