For investors who use charts and price action to guide their choices, a methodical process can help reduce market distraction and find likely opportunities. One method involves looking for stocks that show both good basic technical condition and a favorable price formation, indicating they may be ready for a possible price move. This method depends on two specific scores from ChartMill: the Technical Rating, which measures the general condition and direction of a stock, and the Setup Quality Rating, which evaluates if the stock is making a precise, usable pattern. By concentrating on securities that rate well on both measures, technical investors try to join the next phase of a clear upward move from a sensible starting point with clear risk.
A Base of Very Good Technical Condition
The first and most important filter for this price move method is a high Technical Rating, and ENBRIDGE INC (NYSE:ENB) performs well here with a top score of 10. This high rating shows that the stock is not only in an upward move, but is displaying very good technical condition across various time periods. A close look at the technical report shows the foundations of this condition:
- Trend Agreement: Both the near-term and longer-term trends for ENB are rated as good. This agreement is a strong indicator, showing continued buying without major disagreement between different time frames.
- Market Performance: ENB is now trading close to its 52-week high, doing better than about 80% of all stocks over the last year. Importantly, while the wider S&P 500 is not close to new highs, ENB is performing better than the market, a main trait looked for in price move candidates.
- Moving Average Condition: The stock is trading above all its main simple moving averages (20, 50, 100, and 200-day), and each of these averages is itself in a rising formation. This layered agreement of support levels is a typical sign of a solid, healthy trend.
This solid technical foundation is necessary for the method because it raises the chance that any price move from a period of little change will continue in the direction of the main trend, instead of stopping or turning down.
A Good Formation for a Clear Start
A solid trend by itself is not a signal to buy; starting after a fast rise involves risk. This is where the Setup Quality Rating of 8 becomes important. It shows that ENB has been holding its recent gains in a controlled way, forming a possible base for its next action. The technical report lists the traits of this formation:
- Bull Flag Formation: The analysis specifically states that ENB is now showing a bull flag formation. This formation happens when prices decline slightly in a small range after a strong rise, usually showing a pause before the earlier upward move continues.
- Lower Volatility & Clear Points: The period of little change has let volatility decrease and has made specific, close reference points for traders. Resistance is seen just above the current price near $54.07, $54.34, while a clear support area is between $53.45 and $53.93.
- Favorable Volume Activity: A recent "Pocket Pivot" signal, where price increases on volume greater than the highest down volume of the previous ten days, suggests buying is happening even during the period of little change, a good sign for large investor interest.
For a technical price move method, this high setup score means a practical plan. It lets an investor prepare a trade with exact details: a buy order set just above the resistance area (for example, at $54.35) to confirm the price move is starting, with a protective stop-loss order set just below the support area (for example, at $53.44) to control risk if the action does not work.
Finding Other Opportunities
ENBRIDGE INC shows a clear example of a stock that fits the strict two-part needs of good technicals and a good formation. Its top Technical Rating of 10 shows market-leading condition, while its Setup Rating of 8 indicates a clear bull flag formation giving a sensible, risk-clear starting point.
For technical investors wanting to find similar possible price move formations each day, the process is methodical. You can find new, daily results by using the prepared Technical Breakout Setups screen on ChartMill, which sorts the market for stocks with a Technical Rating >= 7 and a Setup Rating > 7.
Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer to buy or sell any security. The analysis uses technical data and automatic rating models. Trading involves risk, including the possible loss of principal. Always do your own research, think about your financial position and risk comfort, and talk with a qualified financial advisor before making any investment choices. Past results do not guarantee future outcomes.