Trading the Setup In AES

Published on Thursday, 29 March 2012 07:08 Written by TradersHuddle Wire

New York, March 29th (TradersHuddle.com) - AES Corporation (NYSE:AES) ended the trading session at $13.02, near its 50 day moving average set at $13.17. AES's price action placed the stock below this important level, which makes it difficult to be bought, as the stock will certainly face resistance as it approaches its 50 day moving average.

AES Corporation (NYSE:AES), together with its subsidiaries, engages in the generation and distribution of electricity in Asia, North America, Europe, Latin America, and Africa. The Company sells electricity under long term contracts and serves customers under its regulated utility businesses.The company generates electricity through various resources, including coal, gas, and fuel oil, as well as hydro, wind, and solar.

The latest price action range, defined by a peaks and troughs algorithm, placed calculated support at $12.88 and resistance at $14.01. These levels will be closely monitored, as they provide great insight into the latest price dynamics.

If traders want to establish a position in AES, given the resistance expected as the stock approaches its 50 day moving average, a trade might materialize as the stock manages to break this important technical level. After the breakout, the 50 day moving average could be used as support going forward. However, until the break materializes, buying the stock is basically a gamble with 50-50 chance.