Is Chiquita Brands Setting up for a Break Out?

Published on Tuesday, 31 January 2012 05:44 Written by Christian Paolinetti

New York, January 31st (TradersHuddle.com) - Shares of Chiquita Brands International, Inc. (NYSE:CQB) closed the trading session at $8.83 placing the price action in a very tight range, given that calculated support is set at $8.42 and the calculated resistance based on an algorithm of peaks and troughs is set at $8.85

Chiquita Brands International, Inc. (NYSE:CQB) markets, produces, and distributes fresh bananas and other fresh produce. The Company also distributes and markets fresh-cut fruit and other branded fruit products.

Chiquita Brands' 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 Chiquita Brands' price action, as any movement outside its predefined range of $8.42 and $8.85 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 $8.42 could spark above average selling. A tiered approach can be a good way to approach starting a position in Chiquita Brands', 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.