Is Visa Setting up for a Break Out?

Published on Wednesday, 25 January 2012 08:16 Written by Danny Miller

New York, January 25th (TradersHuddle.com) - Shares of Visa Inc. (NYSE:V) closed the trading session at $101.01 placing the price action in a very tight range, given that calculated support is set at $98.80 and the calculated resistance based on an algorithm of peaks and troughs is set at $104.20

Visa Inc. (NYSE:V) is a retail electronic payments network operator. The company manages global financial services and offers global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities.

Visa'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 Visa's price action, as any movement outside its predefined range of $98.80 and $104.20 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 $98.80 could spark above average selling. A tiered approach can be a good way to approach starting a position in Visa'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.