Cardiol Therapeutics Inc. (CRDL) “Hammer Chart Pattern”: Time to Bottom Fish?
Price trend for Cardiol Therapeutics, Inc (CRDL) has been bearish lately and the stock has lost 10.2% over the past week. However, the formation of a hammer chart pattern in the last trading session indicates that the stock may see a trend reversal soon, as the bulls may have gained significant control over the price to help it find support.
While the formation of a hammer pattern is a technical indicator of approaching the bottom with the possibility of exhausting selling pressures, the growing optimism among Wall Street analysts regarding the future profits of this company is a strong fundamental factor that enhances the odds of a trend reversal for the stock. stock.
Understanding the hammer chart and its trading technique
This is one of the common price patterns in candlestick charts. The small difference between the open and close prices forms a small candle body, and the higher difference between the lowest price of the day and the open or close price forms a long lower wick (or vertical line). The lower wick is at least twice the length of the real body, and the candle resembles a “hammer.”
In simple terms, during a downtrend, with the bears in absolute control, the stock usually opens lower compared to the previous day’s close, and closes lower again. On the day when the hammer pattern is formed, while maintaining the downtrend, the stock records a new low. However, after eventually finding support at the intraday low, some amount of buying interest emerged, pushing the stock higher to close the session near or slightly above the opening price.
When it occurs at the bottom of a downtrend, this pattern indicates that bears may have lost control of the price. The success of the bulls in preventing the price from falling further indicates a possible reversal in the trend.
Hammer candles can occur on any time frame – such as one minute, daily or weekly – and are used by short-term as well as long-term investors.
Like every technical indicator, the hammer chart pattern has its limitations. In particular, since the strength of the hammer depends on its position on the chart, it should always be used in conjunction with other bullish indicators.
Here’s what increases your odds of converting to CRDL
The upward trend in earnings estimate revisions that CRDL has seen recently could certainly be considered a bullish indicator on the fundamental side. This is because empirical research shows that trends in earnings estimates are strongly related to near-term stock price movements.
The consensus EPS estimate for the current year has risen 12.2% in the past 30 days. This means that Wall Street analysts covering CRDL are largely in agreement about the company’s potential to report better earnings than they previously expected.
If that’s not enough, you should note that CRDL currently has a Zacks Rank #2 (Buy), which means it’s in the top 20% of more than 4,000 stocks we rank based on trends in earnings estimate revisions and EPS surprises. . Stocks with a Zacks Rank #1 or 2 typically outperform the market. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
Moreover, Cardiol Therapeutics Inc. has a Zacks Rank of 2. A more conclusive indicator of a potential trend reversal, the Zacks Rank has proven to be an excellent timing indicator that helps investors accurately determine when a company’s prospects begin to improve.
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