Playing the bounce in Gol Linhas Aereas Inteligentes

Published on Monday, 19 December 2011 19:52 Written by Christopher Lynn

New York, December 19th (TradersHuddle.com) - Shares of Gol - Linhas Aereas Inteligentes S.A. (NYSE:GOL) closed the trading session at $6.87 well below calculated support at $7.64 placing the stock in oversold territory, as investors and money managers have been moving out of the stock

Gol - Linhas Aereas Inteligentes S.A. (NYSE:GOL) provides low-fare, non-stop passenger flight services through its fleet of next generation Boeing airplanes. The company provides domestic flights in Brazil.

Gol Linhas Aereas Inteligentes' stock was trading in a well defined range with support at $7.64 and resistance at $8.94, 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 Gol Linhas Aereas Inteligentes 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 $7.64. Traders wanting to establish a long position in Gol Linhas Aereas Inteligentesto play an oversold bounce should consider waiting for evidence of buying at a specified area to use it as a pivot placing stop losses.