For technical investors, a common method involves finding stocks that are both in a strong upward price move and are now pausing, set for a possible next rise. This method tries to take part in the next phase of a continued move by getting in at a time of relative calm, with well-marked limits on potential loss. The process often uses custom scoring methods that distinguish a stock's general technical condition from the present state of its price action. One filter, which looks for stocks with high technical and setup scores, lately found Archrock Inc (NYSE:AROC) as an option displaying these traits.
Technical Condition Review
The base of any next-rise method is a stock with fundamental technical soundness. A stock must be in a verified upward move to raise the chance that a next rise will lead to more price increases instead of stalling. Based on the ChartMill Technical Analysis report, Archrock (AROC) gets a Technical Rating of 7 out of 10. This score puts it clearly in the group of stocks seen to be in an upward move.
The report lists several items adding to this score:
- Trend Direction: Both the near-term and longer-term price directions for AROC are scored as good, a positive signal for methods that follow trends.
- Moving Average Backing: The stock is priced above its important near- and medium-term moving averages (20-day, 50-day, and 100-day SMAs), and these averages are themselves arranged in rising patterns, confirming the upward force.
- Performance Background: While the stock's half-year gain of more than 13% is good, the report states that AROC has trailed both the wider S&P 500 and similar companies in the Energy Equipment & Services field over the last year. This implies the recent positive move may be a recovery period, which can at times present interesting chances.
This technical setting is key because it answers the first question for a technical trader: "Is this a stock I want to own?" A score of 7 shows the trend is positive, giving support for any possible next-rise move.
Setup State and Next-Rise Formation
A solid trend by itself is not a sign to purchase; getting in at a high price can lead to quick declines. This is where the setup state becomes very important. It finds times of pause or basing inside the larger upward move, giving a lower-risk entry point. Archrock does well here, having a high Setup Rating of 9 out of 10.
The technical report points out why the present formation is interesting for next-rise investors:
- Price Pause: The stock has been trading in a set band between about $25.09 and $27.38 over the last month and is now placed in the middle of this band. This coiling action often comes before a directional move.
- Clear Support Area: A well-marked support zone is noted between $26.41 and $25.98, made by a combination of trendlines and moving averages. This gives a sensible level for setting a protective stop-loss order, clearly marking the trade's possible loss.
- Little Immediate Price Barrier: The report states there is very small price resistance just above the present trading level. A move above the recent band could meet little selling pressure, letting a next rise build force.
- Supporting Volume Activity: A recent "Pocket Pivot" signal was seen, which is a volume-based sign pointing to buying by larger participants during the pause phase, a good signal for the durability of a possible next rise.
This high setup score directly speaks to the trader's second question: "When should I purchase it?" It implies the stock is not overbought and is gathering energy for its next move, with a clear risk-control point available just below the pause.
A Possible Trade Plan
From this review, the technical report describes an example next-rise plan. It proposes an entry point on a move above the recent band high at $27.39, with a stop-loss order set just below the noted support zone at $26.40. This would cap the theoretical loss on the trade to about 3.6%. It is very important to know this is an example made from the technical formations; real entry, exit, and position size must be fitted to a person's loss comfort and trade plan.
Finding More Chances
The filter that found Archrock is used each day to find new possible next-rise plans meeting similar standards of solid technicals and good pause formations. Investors wanting to see the current list of options can view it through the Technical Breakout Setups screen.
Disclaimer: This article is for information only and does not make up investment guidance, a suggestion, or a deal to purchase or sell any security. The review is based on technical information and automatic scoring models, which have limits. Always do your own research, think about your money situation and loss comfort, and talk with a qualified money advisor before making any investment choices. Past results are not a guide to future results.
