Is HSBC Setting for a Break Out?

Published on Wednesday, 13 June 2012 06:56 Written by TradersHuddle Wire

New York, June 13th (TradersHuddle.com) - HSBC Holdings plc (NYSE:HBC) closed the trading day at $42.13, near its 50 day and 200 day moving averages set at $42.93 and $41.72 respectively. HSBC's price action placed the stock above the 200 day moving average but below its 50 day moving average, a setup that signals a possible break out.

HSBC Holdings plc (NYSE:HBC) is the holding company for the HSBC Group. The Financial firm provides a variety of international banking and financial services, including retail and corporate banking, trade, trusteeship, securities, custody, capital markets, treasury, private and investment banking, and insurance. The Group is headquartered in London and operates worldwide. The firm is the largest lender in Europe and one of the largest banking institutions worldwide, with the most emerging markets exposure.

HSBC seems to be setting up for a tight range between the 200 day moving average as support and the 50 day moving average serving as resistance.

A tiered approach, appears to be the best strategy to maximize possible movements in the stock, as traders could establish a small position in HSBC and wait for the stock to break out above its 50 day moving average at $42.93. Then they could add to the position as momentum builds with the breakout. On the flip side, if support being referenced at the 200 day moving average set at $41.72 breaks, it could signal further downside pressure for HSBC.