Trading Idea: What to Expect with AutoNation Breaking Support
Published on Wednesday, 11 April 2012 05:44 Written by TradersHuddle Wire
New York, April 11th (TradersHuddle.com) - Shares of AutoNation, Inc. (NYSE:AN) closed the trading session at $32.54 below calculated support at $34.09. The stock broke down technically, raising concerns as the move might trigger additional selling.
AutoNation, Inc. (NYSE:AN) retails, finances, and services new and used vehicles. The Company also provides other related services and products, such as the sale of parts and accessories, extended service contracts, aftermarket automotive products, and collision repair services.
AutoNation's stock was trading in a well defined range with support at $34.09 and resistance at $35.85; 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, $34.09 will remain in focus as AutoNation's price action places the stock near the broken support. Traders will be waiting to see if it can bounce back and return to its previous range.
Traders wanting to establish a short position in AutoNation can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $34.09. However, if traders want to build a long position, the best entry point to do so is when the price action takes the stock back to calculated support.
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