Carpenter Technology in a very Tight Range

Published on Friday, 27 January 2012 07:44 Written by Christian Paolinetti

New York, January 27th (TradersHuddle.com) - Shares of Carpenter Technology Corporation (NYSE:CRS) closed the trading session at $55.44 placing the price action in a very tight range, given that calculated support is set at $53.55 and the calculated resistance based on an algorithm of peaks and troughs is set at $56.63

Carpenter Technology Corporation (NYSE:CRS) manufactures and fabricates, stainless steels, titanium, and specialty metal alloys. The company operates in two segments, Advanced Metals Operations and Premium Alloys Operations. The Advanced Metals Operations segment manufactures and distributes metal alloys, stainless steels, and titanium in the form of small bars and rods, wire, narrow strip, and powder. The Premium Alloys Operations segment provides metal alloys and stainless steels in the form of ingots, billets, large bars, and hollows.

Carpenter'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 Carpenter's price action, as any movement outside its predefined range of $53.55 and $56.63 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 $53.55 could spark above average selling. A tiered approach can be a good way to approach starting a position in Carpenter'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.