Trading Idea - Sohu.com Broke Support, What to Expect?

Published on Wednesday, 30 June 2010 05:28 Written by Danny Miller

New York, June 30th (TradersHuddle.com) - Shares of Sohu.com Inc. (NASDAQ:SOHU) closed the trading session at $40.88 below calculated support at $41.89 breaking the stock technically, raising concerns by investors, as the move might trigger more selling.

Sohu.com Inc. (NASDAQ:SOHU) operates an Internet portal in China. The Company's Web site consists of Chinese language Web navigational and search capabilities, Web-based communications services, and a platform for e-commerce services.

Sohu's stock was trading in a well defined range with support at $41.89 and resistance at $46.69; 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 Sohu's stock is still near the broken support, traders will be focusing on $41.89 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in Sohu.com can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $41.89. 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.