A Harami For Air Products

02/06/08 08:44:34 AM

by Arthur Hill

After bouncing back to broken support, Air Products formed a bearish harami that could signal the end of the bounce.

Security: APD
Position: Sell

Air Products (APD) broke support with a sharp decline in January. The move broke below the October and November lows. These broken support levels now turn into resistance. The stock rallied back to broken support and stalled over the last six days. See Figure 1.

FIGURE 1: APD, DAILY. Here, the broken support levels have turned to resistance.

Graphic provided by: TeleChart2007.

With a gap and a long white candlestick, it looked like the stock might break resistance. However, the stock formed a smaller black candlestick the next day, and the two-day pattern is a harami (blue oval). This is a potentially bearish candlestick reversal pattern that requires confirmation. Another black candlestick and close below 89 would provide confirmation. A move above the harami high would negate this bearish setup.

FIGURE 2: APD, WEEKLY. The next target zone is centered around 75. A lower low makes sense here.

Graphic provided by: TC2000.com.

The first and most obvious downside target is the January low around 81. The next support area is centered around 75. This is the next target and a lower low makes sense. The stock broke a long trendline with the January decline and it looks like a bigger trend change is afoot. Downtrends are all about lower lows and a move below the January low would fit with a downtrend.

Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

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A Harami For Air Products

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