Trading Idea - Mastercard Breaking Down?

Published on Thursday, 09 September 2010 04:20 Written by Danny Miller

New York, September 9th (TradersHuddle.com) - Shares of MasterCard, Inc. (NYSE:MA) closed the trading session at $194.4 below calculated support at $197.06 breaking the stock technically, raising concerns by investors, as the move might trigger more selling.

MasterCard, Inc. (NYSE:MA) is a global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of financial institutions. The Company offers transaction processing services for credit and debit cards, electronic cash, automated teller machines, and travelers checks.

Mastercard's stock was trading in a well defined range with support at $197.06 and resistance at $207.49; 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 Mastercard's stock is still near the broken support, traders will be focusing on $197.06 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in Mastercard can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $197.06. 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.