Banana’s, Tweezers and a Long Nap
- Posted by Greg Harmon
- on February 27th, 2012
While running through charts this weekend I came across 2 in particular that were interesting not because they were ready to break a pattern or trendline or through some resistance or support level. Chiquita Brands, $CQB and Tempur-Pedic, $TPX, had both been moving higher but printed Tweezers Tops on their charts. This pattern, two candles with upper shadows that end at the same point, often signals a reversal, but needs to be confirmed. Lets see what happened Monday.
Chiquita Brands, $CQB
Chiquita Brands, $CQB, shows the Tweezers followed by a Hollow Red candle Monday. This bullish intra-day action is usually a good sign, but following the Tweezers Top, closing below the previous day, it actually confirms the reversal. How low will it go? There is support at the 9.74 area and then 9.05-9.10. Either could give a healthy return on a short.
Tempur-Pedic, $TPX, has the second half of the Tweezers engulfed Monday with a bullish candle moving higher. But note that it did not close above the Tweezers Top. This could still be confirmed lower on Tuesday. The Relative Strength Index (RSI) on this chart is getting overbought as well adding to the required caution in this stock. A close below 76.50 Tuesday cold trigger downside with support at 74 and then 70. If it does close above the previous top at 78.51 then the Tweezers Top will be negated, but the RSI will likely be over 80 at that point. I would suggest you go take a nap instead of buying it there.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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