Potash Coming Down?

Published on Monday, 23 August 2010 06:04 Written by TradersHuddle Staff

New York, August 23rd (TradersHuddle.com) - Shares of Potash Corporation of Saskatchewan Inc. (NYSE:POT) closed the trading day at $149.67 well above its calculated resistance at $116.49, which was calculated from a peak and throughs algorithm, making traders worry about a possible pull back in the stock price.

Potash Corporation of Saskatchewan Inc. (NYSE:POT) produces potash, phosphate, and nitrogen for the agricultural and industrial industries worldwide. The Company operates in Canada, Chile, the United States, Brazil, and Trinidad.

Potash's stock broke out of its defined range that had support at $106.56 and resistance at $116.49. Now the stock is working on developing a new trading range, which should be defined by the high setup after this breakout and its probable support, which could be its previous resistance level $116.49.

From a technical perspective traders should wait to establish a position in Potash until a base in the stock develops that can provide good reference points to the upside and most importantly to the downside, for traders have a risk reference point before entering into a position on Potash stock.