Trading Idea: What to Expect with Capital One Breaking Support
Published on Tuesday, 29 January 2013 06:56 Written by TradersHuddle Wire
New York, January 29th (TradersHuddle.com) - Shares of Capital One Financial Corporation (NYSE:COF) closed the trading session at $56 below calculated support at $56.08. The stock broke long setups, prompting the bulls to worry that this move might give the bears the upper hand.
Capital One Financial Corporation (NYSE:COF) is a diversified bank. The Bank, through its subsidiaries, offers a broad spectrum of financial products and services, like credit cards and car loans to consumers, small businesses and commercial clients both domestically and internationally. Headquartered in McLean, Virginia, Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia.
Capital One's stock was trading in a well defined range with support at $56.08 and resistance at $62.92; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.
From a technical perspective, it can be expected that previous support becomes resistance, as the new range gets defined. However, $56.08 will remain in focus as Capital One's price action places the stock near the broken support. Traders will be waiting to see if it can bounce back and return to its previous range.
Traders wanting to establish a short position in Capital One can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $56.08. However, if traders want to build a long position, the best entry point to do so is when the price action takes the stock back to calculated support.
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