Trading Idea - Is Caterpillar close to Resistance?

Published on Tuesday, 20 July 2010 05:04 Written by Christian Paolinetti

New York, July 20th (TradersHuddle.com) - Shares of Caterpillar, Inc. (NYSE:CAT) are trading very close to calculated resistance at $67.37 with the current price action closing at just $64.80 placing the stock near levels that make it difficult to buy.

Caterpillar Inc. designs, manufactures, and markets construction, mining, agricultural, and forestry equipment. The Company also manufactures engines and other related parts for its equipment, and offers financing and insurance. Caterpillar, the largest earth moving equipment maker in the world, distributes its products through a worldwide organization of dealers. The maker of bulldozers and excavators was founded in 1925 and headquartered in Peoria, IL.

Caterpillar's current stock range is defined by current calculated support defined at $58.06 and by the resistance level at $67.37, the stock is clearly over-extended from support, making it difficult to establishing new long positions at this level.

Traders don't have a clear entry point for Caterpillar, as the stock is well above support, however, as the stock pulls back towards $58.06 it will definitely provide a reference point to establish a trade. On the other hand if the stock decides to break above resistance level at $67.37 then traders will get an opportunity to enter Caterpillar stock by establishing a position as the stock moves to a higher range.