Trading Idea - How to Play the bounce in JDS Uniphase

Published on Monday, 19 December 2011 19:32 Written by TradersHuddle Staff

New York, December 19th (TradersHuddle.com) - Shares of JDS Uniphase Corporation (NASDAQ:JDSU) closed the trading session at $9.27 well below calculated support at $10.33 placing the stock in oversold territory, as investors and money managers have been moving out of the stock

JDS Uniphase Corporation (NASDAQ:JDSU) provides communications test and measurement solutions and optical products for telecommunications service providers, cable operators, and network equipment manufacturers. The Company also provides optical solutions for medical/environmental instrumentation, semiconductor processing, display, brand authentication, aerospace and defense.

JDS Uniphase's stock was trading in a well defined range with support at $10.33 and resistance at $11.37, prior to its decline. It was evident how traders went out of the stock, when it broke calculated support sparking the current down draft.

From a technical perspective the JDS Uniphase stock is in severe pain, as the harsh sell-off could place a heavy burden of buyers wanting their money back, generating a price dynamic where buyers will become sellers when a bounce materializes. It can be expected that previous support becomes resistance, as a new range gets defined, therefore the maximum move for the stock should be calculated to return to previous support at $10.33. Traders wanting to establish a long position in JDS Uniphaseto play an oversold bounce should consider waiting for evidence of buying at a specified area to use it as a pivot placing stop losses.