Is Avon Waiting for a Break Out?

Published on Wednesday, 01 August 2012 08:16 Written by TradersHuddle Wire

New York, August 1st (TradersHuddle.com) - Avon Products Inc. (NYSE:AVP) ended the trading session at $15.49, near its 50 day moving average set at $15.90. Avon'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.

Avon Products, Inc. (NYSE:AVP) manufactures and direct sells beauty and related products. The Company markets its products to consumers worldwide through independent sales representatives.

The latest price action range, defined by a peaks and troughs algorithm, placed calculated support at $15.01 and resistance at $16.25. These levels will be closely monitored, as they provide great insight into the latest price dynamics.

If traders want to establish a position in Avon, 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.