Range Tightening in Procter

Published on Friday, 10 February 2012 07:44 Written by TradersHuddle Wire

New York, February 10th (TradersHuddle.com) - Shares of Procter & Gamble Co. (NYSE:PG) closed the trading session at $64.04 placing the price action in a very tight range, given that calculated support is set at $62.70 and the calculated resistance based on an algorithm of peaks and troughs is set at $65.50

Procter & Gamble Company (NYSE:PG), a global consumer products company manufactures and markets its products in countries throughout the world. The Company provides products in the laundry, beauty care, food and beverage, and health care segments. Some of P&G famous brands are Gillete, Tide, Head & Shoulders, and Crest. Proctor & Gamble's products are sold primarily through mass merchandisers, grocery stores, membership club stores, and drug stores. The company uses a diversified distribution channel, it was founded in 1837 as a candle company, and its headquartered in Cincinnati, OH.

Procter'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 Procter's price action, as any movement outside its predefined range of $62.70 and $65.50 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 $62.70 could spark above average selling. A tiered approach can be a good way to approach starting a position in Procter'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.