Range Tightening in Southwestern Energy

Published on Monday, 19 July 2010 06:56 Written by Christopher Lynn

New York, July 19th (TradersHuddle.com) - Shares of Southwestern Energy Company (NYSE:SWN) closed the trading session at $37.41 placing the price action in a very tight range, given that calculated support is set at $37.15 and the calculated resistance based on an algorithm of peaks and troughs is set at $39.18

Southwestern Energy Company (NYSE:SWN) is an independent energy company primarily focused on natural gas and crude oil exploration within the United States. The Company operations also include natural gas gathering, transmission, and marketing, as well as natural gas distribution.

Southwestern'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 Southwestern's price action, as any movement outside its predefined range of $37.15 and $39.18 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 $37.15 could spark above average selling. A tiered approach can be a good way to approach starting a position in Southwestern'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.