For technical investors, a common method looks for stocks that are in a clear upward move and also trading in a narrow band, preparing for a possible next rise. This method aims to join the next part of a stock's climb by entering after a time of quiet price movement. The ChartMill platform measures this method with two own scores: a Technical Rating that evaluates the general condition and trend force of a stock, and a Setup Quality Rating that checks the narrowness of its recent price moves and the existence of a defined entry spot. A stock with high marks in both areas can offer an interesting chance for traders seeking moves based on price speed.
EQT CORP (NYSE:EQT), a top independent natural gas producer with work centered in the Appalachian Basin, now appears as one example. As per the recent ChartMill Technical Analysis report, the stock gets a solid Technical Rating of 8 and a Setup Quality Rating of 9. This pair indicates EQT has both good technical condition and is making a shape that might come before a notable price change.
Technical Force: A Good Base
The main point for any speed investor is if a stock is in a good, continuing upward move. EQT's Technical Rating of 8 gives a strong yes. This mark comes from a review of several time periods and items, and a mark over 7 is usually for stocks in a definite upward move. The report lists several main points that build this mark:
- Good Trend Agreement: Both the near-term and longer-term trends for EQT are seen as good. This agreement across time periods is a strong sign, showing steady buying and lowering the chance of a trend change.
- Good Moving Average Backing: The stock trades above all its main simple moving averages (20, 50, 100, and 200-day), and each average is also rising. This makes a stacked base under the price.
- Good Relative Results: Over the last year, EQT has done better than about 65% of all stocks. While it may not be the number one, this puts it in the high group and shows it is keeping up even as the wider S&P 500 trades near peaks.
This technical force is key for the next rise method because it supplies the base speed. A next rise from a weak stock is much more prone to fall short. EQT's high Technical Rating confirms the stock has the base force required to possibly continue a new climb.
Setup Quality: The Quiet Time Before the Change
Finding a strong trend is only part of the work; choosing the entry time is also key. Entering a stock after a fast, long climb holds large risk of a quick drop. This is where the Setup Quality Rating is very useful. EQT's mark of 9 indicates a very good quiet pattern, answering the key question of when to think about an entry.
The technical report notes the traits of this high-grade setup:
- Lowered Movement and Quiet Trading: Prices have been trading in a quiet band over the last month, with movement lessening. This "winding" action often comes before a clear change as supply and demand balance.
- Defined Base and Ceiling Areas: The review finds a clear base area between $58.40 and $59.73, made by a mix of trend lines and moving averages. Just above the present price sits a main ceiling area between $60.44 and $61.18. These clear lines allow for exact trade plans.
- Big Player Attention: The report states that large traders, as measured by the Effective Volume tool, have shown attention to EQT in recent days. This can be a confirming sign that informed money is placing itself before a possible change.
For a next rise method, this setup is very good. The quiet trading gives a low-movement entry area, the narrow base area offers a sensible spot for a protective stop-loss order, and the set ceiling line above gives a clear trigger point for a possible next rise entry.
A Possible Trade Plan
From this review, ChartMill's system proposes a specific, though automatic, trade idea. The suggested plan uses the found ceiling and base lines to set risk:
- Entry: A buy-stop order at $61.19, placed just above the ceiling area to confirm the next rise has started.
- Exit/Stop-Loss: A stop-loss order at $58.39, placed just below the main base area to limit loss if the next rise fails.
- Risk Control: This plan sets a risk of about $2.80 per share, or 4.58%. Using position size, an investor could place money so the total portfolio risk from this trade stays at a controlled level, like 1%.
It is important to recall this is a system-made example. The space between the entry and stop is quite narrow next to the stock's usual daily move, which might lead to a greater chance of being stopped out. Traders should always do their own review, thinking of their own risk comfort and possibly changing these lines to find a more fitting entry and exit point for their method.
Finding Other Chances
EQT Corp. shows the kind of chance the Technical Next Rise method tries to find: a basically strong trend matched with a helpful, low-risk entry shape. For investors looking to check the market each day for similar setups, new examples are found often. You can see the present list of high-marked technical next rise setups by going to the Technical Breakout Setups screen on ChartMill.
Notice: This article is for information only and is not investment guidance, a suggestion, or a deal to buy or sell any securities. The review and trade plan shown are from automatic technical models and should not be seen as a promise of future results. All investing and trading holds risk, including the possible loss of original money. Always do your own full study, think of your personal money state and risk comfort, and talk with a registered money advisor before making any investment choices.