Playing the Momentum Building in Aflac

Published on Tuesday, 17 January 2012 07:28 Written by TradersHuddle Staff

New York, January 17th (TradersHuddle.com) - Shares of Aflac, Inc. (NYSE:AFL) closed the trading session at $43.18 placing the price action in a very tight range, given that calculated support is set at $42.47 and the calculated resistance based on an algorithm of peaks and troughs is set at $44.86

Aflac, Inc. (NYSE:AFL) and through its subsidiaries, provides supplemental insurance in the United States and Japan. Some of Aflac's products include accident/disability plans, cancer expense plans, short-term disability plans, sickness and hospital indemnity plans, and hospital intensive care plans.

Aflac'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 Aflac's price action, as any movement outside its predefined range of $42.47 and $44.86 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 $42.47 could spark above average selling. A tiered approach can be a good way to approach starting a position in Aflac'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.