Trading Idea - HSBC Broke Support, What to Expect?

Published on Friday, 20 August 2010 05:12 Written by Christian Paolinetti

New York, August 20th (TradersHuddle.com) - Shares of HSBC Holdings plc (NYSE:HBC) closed the trading session at $49.83 below calculated support at $50.64 breaking the stock technically, raising concerns by investors, as the move might trigger more selling.

HSBC Holdings plc (NYSE:HBC), through its subsidiaries, provides a variety of international banking and financial services, including retail and corporate banking, trade, trusteeship, securities, custody, capital markets, treasury, private and investment banking, and insurance.

HSBC's stock was trading in a well defined range with support at $50.64 and resistance at $54.08; 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, given that HSBC's stock is still near the broken support, traders will be focusing on $50.64 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in HSBC can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $50.64. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.