Here’s Why HIVE Blockchain (HIVE) Looks Ripe for Bottom Fishing – February 14, 2023
The price development for HIVE Blockchain (HIV – Free Report) has been bearish lately, and the stock has lost 15.9% in the past week. However, the formation of a hammer chart pattern in its last trading session indicates that the stock may witness a trend reversal soon as bulls may have gained significant control over the price to help it find support.
While the formation of a hammer pattern is a technical indication of nearing a bottom with potential exhaustion of selling pressure, growing optimism among Wall Street analysts about future earnings for this cryptocurrency mining company is a solid fundamental that improves prospects for a trend reversal for the stock.
Understand the Hammer Chart and the technique of trading it
This is one of the popular price patterns in charting candlesticks. A smaller difference between the open and close forms a small candle body, and a higher difference between the day’s low and open or close forms a long lower wick (or vertical line). The length of the lower wick is at least twice as long as the real body, the candle resembles a “hammer”.
Simply put, during a downtrend, with bears in absolute control, a stock usually opens lower compared to the previous day, and closes lower again. The day the hammer pattern forms, and maintains the downtrend, the stock makes a new low. However, after finding support at today’s low, a certain amount of buying interest appears, pushing the stock up to close the session near or slightly above its opening price.
When it occurs at the bottom of a downtrend, this pattern signals that the bears may have lost control of the price. And bulls’ success in stopping the price from falling further indicates a potential trend reversal.
Hammer candles can occur in any time frame – for example, one minute, daily, weekly – and are used by both short-term as well as long-term investors.
Like any technical indicator, the hammer chart pattern has its limitations. Especially since the strength of a hammer depends on its position on the chart, it should always be used in conjunction with other bullish indicators.
Here’s what makes a trend reversal more likely for HIVE
An upward trend in earnings estimate revisions that HIVE has witnessed of late can certainly be considered a bullish indicator on the fundamental side. That’s because empirical research shows that trends in earnings estimate revisions are highly correlated with stock price movements in the short term.
The consensus EPS estimate for the current year has increased by 15.9% over the past 30 days. This means that the Wall Street analysts covering HIVE largely agree on the company’s potential to report better earnings than what they previously predicted.
If that’s not enough, you should note that HIVE currently has a Zacks Rank #2 (Buy), meaning it’s in the top 20% of the more than 4,000 stocks we rank based on trends in earnings estimate revisions and EPS surprises. And stocks that have 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 >>>>
Also, a Zacks Rank of 2 for HIVE Blockchain is a more conclusive indication of a potential trend reversal, as the Zacks Rank has proven to be an excellent timing indicator that helps investors identify exactly when a company’s outlook is starting to improve.
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