Adobe in a very Tight Range

Published on Wednesday, 21 July 2010 19:32 Written by Christian Paolinetti

New York, July 21st (TradersHuddle.com) - Shares of Adobe Systems Incorporated (NASDAQ:ADBE) closed the trading session at $27.67 placing the price action in a very tight range, given that calculated support is set at $26.94 and the calculated resistance based on an algorithm of peaks and troughs is set at $28.43

Adobe Systems Incorporated (NASDAQ:ADBE) develops, markets, and supports computer software products and technologies. The Company's products allow users to present and use information across all print and electronic media. Adobe offers a line of application software products, type products, and content for creating, distributing, and managing information. The company popular Acrobat Reader allows companies and consumers to exchange a wide variety of electronic information and documents.

Adobe'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 Adobe's price action, as any movement outside its predefined range of $26.94 and $28.43 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 $26.94 could spark above average selling. A tiered approach can be a good way to approach starting a position in Adobe'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.