Playing the Momentum Building in Coca-Cola Enterprises

Published on Tuesday, 31 August 2010 19:12 Written by Christopher Lynn

New York, August 31st (TradersHuddle.com) - Shares of Coca-Cola Enterprises, Inc. (NYSE:CCE) closed the trading session at $28.46 placing the price action in a very tight range, given that calculated support is set at $27.88 and the calculated resistance based on an algorithm of peaks and troughs is set at $29.46

Coca-Cola Enterprises, Inc. (NYSE:CCE) engages in the manufacture, distribution, and marketing of nonalcoholic beverages. The company offers its products principally under the Coca-Cola classic, Sprite, Dasani, POWERADE, Coca-Cola, Diet Coke/Coca-Cola light, Fanta, and Coca-Cola Zero brand names.

Coca-Cola Enterprises' 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 Coca-Cola Enterprises' price action, as any movement outside its predefined range of $27.88 and $29.46 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 $27.88 could spark above average selling. A tiered approach can be a good way to approach starting a position in Coca-Cola Enterprises', 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.