Investors have placed European Cobalt Ltd (EUC.AX) shares on watch as the Aroon Down indicator has moved above 70, indicating that there is downward momentum building for the shares.
The Aroon indicator was developed by Tushar Chande in 1995. Aroon is used to measure the presence and strength of trends. According to Chande, whenever the components of the Aroon indicator are in close proximity, this is a sign of market consolidation. Aroon Up measures the uptrend, and Aroon Down measures the downtrend. When Aroon Up or Aroon Down values drop below 50, this indicates loss of upward and downside momentum respectively. Values above 70 are signs of a strong trend for either component, while values that are less than 30 show that primary trend is weakening and opposing trend is picking up.
Investors often conduct stock analysis to help figure out which ones are a good buy, and at what price should they get in. The two main types of stock research used by investors are fundamental and technical analysis. Some investors will only study the fundamentals while others will only follow the technicals. Many will choose to combine the two methods in order to get a more well-rounded view of the stock. Fundamental analysis entails following company data. This may include studying the balance sheet, profit and loss statements, and the overall competency of company management. Fundamental analysts often use financial ratios to help understand company information. Technical analysts often study charts in order to define trends. This research is typically not concerned with how the underlying financials of the company look, but how the stock has been trading.
Diving into some additional numbers, presently, European Cobalt Ltd (EUC.AX) has a 14-day Commodity Channel Index (CCI) of -181.03. The CCI technical indicator can be used to help determine if a stock is overbought or oversold. CCI may also be used to help discover divergences that could possibly signal reversal moves. A CCI closer to +100 may provide an overbought signal, and a CCI near -100 may offer an oversold signal.
Tracking other technical indicators, the 14-day RSI is presently standing at 22.01, the 7-day sits at 7.52, and the 3-day is resting at 0.59 for European Cobalt Ltd (EUC.AX). The Relative Strength Index (RSI) is a highly popular technical indicator. The RSI is computed base on the speed and direction of a stock’s price movement. The RSI is considered to be an internal strength indicator, not to be confused with relative strength which is compared to other stocks and indices. The RSI value will always move between 0 and 100. One of the most popular time frames using RSI is the 14-day.
Moving averages have the ability to be used as a powerful indicator for technical stock analysis. Following multiple time frames using moving averages can help investors figure out where the stock has been and help determine where it may be possibly going. The simple moving average is a mathematical calculation that takes the average price (mean) for a given amount of time. Currently, the 7-day moving average is sitting at 0.04.
Traders often employ unique systems when trying to beat the stock market. There are many different trading strategies or systems that can be used. New traders may find out very quickly that trading without a plan is a recipe for ruin. When starting out, it may require a lot of focus and dedication just to stay afloat. With more experience and hard work, traders may be able to eventually scoop up some of those profits that they were expecting when they started out. Some traders may have a few big wins right out of the gate. This may lead to overconfidence in the future if the proper precautions are not taken. Traders constantly need to be paying attention to everything that is going with the stock market. Moves can happen in the blink of an eye and without any notice. Being prepared to take a position at a moment’s notice can pay off big when the opportunity arises.
Let’s take a further look at the Average Directional Index or ADX. The ADX measures the strength or weakness of a particular trend. Investors and traders may be looking to figure out if a stock is trending before employing a specific trading strategy. The ADX is typically used along with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) which point to the direction of the trend. The 14-day ADX for European Cobalt Ltd (EUC.AX) is currently at 15.30. In general, and ADX value from 0-25 would represent an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would signify a very strong trend, and a value of 75-100 would point to an extremely strong trend.
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