Playing the Momentum Building in United Health

Published on Wednesday, 08 February 2012 07:04 Written by TradersHuddle Wire

New York, February 8th (TradersHuddle.com) - Shares of United Health Group Incorporated (NYSE:UNH) closed the trading session at $52.03 placing the price action in a very tight range, given that calculated support is set at $50.68 and the calculated resistance based on an algorithm of peaks and troughs is set at $53.61

United Health Group Incorporated (NYSE:UNH) owns and manages organized health systems in the United States and internationally. The Company provides employers products and resources to plan and administer employee benefit programs.

United Health'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 United Health's price action, as any movement outside its predefined range of $50.68 and $53.61 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 $50.68 could spark above average selling. A tiered approach can be a good way to approach starting a position in United Health'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.