Chartists are paying particular close attention to shares of Algonquin Power & Utilities Corp (AQN) as the equity has touched the near-term bottom Bollinger Band, touching 10.79 on a recent trade. Using this along with several other technical indicators can help investors understand if the shares will continue the downward momentum or bounce back up from the band.
Bollinger Bands are a technical analysis tool, specifically they are a type of trading band or envelope. Trading bands and envelopes serve the same purpose, they provide relative definitions of high and low that can be used to create rigorous trading approaches, in pattern recognition, and for much more. Bands are usually thought of as employing a measure of central tendency as a base such as a moving average, whereas envelopes encompass the price structure without a clearly defined central focus, perhaps by reference to highs and lows, or via cyclic analysis. We’ll use the term trading bands to refer to any set of curves that market technicians use to define high or low on a relative basis.
As a market becomes volatile, its Bollinger bands will expand (referred to as expansion); as it flattens out they will contract (contraction). In this way, they enable traders to see beyond short-term volatility and gain insight into longer price movements.
The use of Bollinger bands can also indicate whether a market is heading into overbought or oversold territory. When a market’s price continually moves outside the upper parameters of a Bollinger band, it can be considered to be overbought, and when it moves below the lower band it could be considered oversold.
Turning to Relative Strength Index for Algonquin Power & Utilities Corp (AQN), the 14-day RSI is currently noted at 50.61, the 7-day is 43.43, and the 3-day is sitting at 22.38. The Relative Strength Index (RSI) is a very popular momentum indicator used for technical analysis. The RSI can help show whether the bulls or the bears are currently strongest in the market. The RSI may be used to help spot points of reversals more accurately. The RSI was developed by J. Welles Wilder. As a general rule, an RSI reading over 70 would signal overbought conditions. A reading under 30 would indicate oversold conditions.
In terms of CCI levels, Algonquin Power & Utilities Corp (AQN) currently has a 14-day Commodity Channel Index (CCI) of -12.85. Investors and traders may use this indicator to help spot price reversals, price extremes, and the strength of a trend. Many investors will use the CCI in conjunction with other indicators when evaluating a trade. The CCI may be used to spot if a stock is entering overbought (+100) and oversold (-100) territory. The 14-day ADX is presently 24.28. Many technical chart analysts believe that an ADX reading over 25 would suggest a strong trend. A level under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal. The ADX is typically plotted along with two other directional movement indicator lines, the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI). Some analysts believe that the ADX is one of the best trend strength indicators available.
Investors may be studying other technical indicators like the Williams Percent Range or Williams %R. The Williams %R is a momentum indicator that helps measure oversold and overbought levels. This indicator compares the closing price of a stock in relation to the highs and lows over a certain time period. A common look back period is 14 days. Algonquin Power & Utilities Corp (AQN)’s Williams %R presently stands at -67.74. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would indicate an overbought situation. A reading from -80 to -100 would indicate an oversold situation. Looking at some moving average levels, the 200-day is at 9.65, the 50-day is 10.60, and the 7-day is sitting at 10.96. Moving averages can help identify trends and price reversals. They may also be used to help spot support and resistance levels. Moving averages are considered to be lagging indicators meaning that they confirm trends. A certain stock may be considered to be on an uptrend if trading above a moving average and the average is sloping upward. On the other side, a stock may be considered to be in a downtrend if trading below the moving average and sloping downward.