Will AK Steel recover?

Published on Thursday, 09 February 2012 06:40 Written by TradersHuddle Wire

New York, February 9th (TradersHuddle.com) - Shares of AK Steel Holding Corporation (NYSE:AKS) closed the trading session at $8.54 below calculated support at $8.76 breaking the stock technically, raising concerns by investors, as the move might trigger more selling.

AK Steel Holding Corporation (NYSE:AKS), through its subsidiaries, produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally. The Company produces coated, cold rolled, and hot rolled carbon steel for the automotive, appliance, construction, and manufacturing markets. AK Steel also cold rolls and aluminum coats stainless steel for automotive industry customers. Key Statistics

AK Steel's stock was trading in a well defined range with support at $8.76 and resistance at $10.33; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that AK Steel's stock is still near the broken support, traders will be focusing on $8.76 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in AK Steel can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $8.76. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.