Range Tightening in Akamai

Published on Wednesday, 01 February 2012 08:44 Written by TradersHuddle Staff

New York, February 1st (TradersHuddle.com) - Shares of Akamai Technologies, Inc. (NASDAQ:AKAM) closed the trading session at $32.23 placing the price action in a very tight range, given that calculated support is set at $31.01 and the calculated resistance based on an algorithm of peaks and troughs is set at $32.59

Akamai Technologies, Inc. (NASDAQ:AKAM) provides global delivery services for Internet content, streaming media, and applications and global Internet traffic management. The Company uses technology and software to offer tools that provide reporting and management capabilities; network data feeds and Website analytics, which provide customers with real time data about the performance of their content and applications over the Internet.

Akamai'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 Akamai's price action, as any movement outside its predefined range of $31.01 and $32.59 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 $31.01 could spark above average selling. A tiered approach can be a good way to approach starting a position in Akamai'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.